Analyst Kieran Trass of the property market research company SuburbWatch claims New Zealand is heading into the worst property slump in 20 years.

He says there is evidence of the value of property falling by as much as 10 percent in the final quarter of 2007, and will probably slide a further 10 percent or more in the main centres this year. Property sales volume is down 40 percent on a year ago.

Mr Trass says it was hoped the market would show some signs of strength in the usually buoyant spring and summer seasons but that did not happen and the market has continued to weaken even more rapidly since them.

Mr Trass says the soft landing for property formerly expected is "not even a remote possibility."

But Mr Trass says the biggest concern is for those on fixed mortgages with around $41 billion worth coming up for renewal this year. He says the homeowners are currently paying eight percent interest on average but that will rise to around 9.8 percent. That represents on average, an extra $141 in interest per month.

Mr Trass says property investors need to focus on reducing debt as quickly a possible and strengthening cash flows so that they can weather the storm. Mr Trass says during the property crash of the early 1990s, he got a second job so that he could afford to ride out the slump. He says defaulting on mortgages was not a palatable option for him so generating extra cash flow was critical to his ability to retain his portfolio. Mr Trass says to ride out a property slump, investors need to increase cash flow, reduce living expenses avoid the "one bank trap" by spreading lending across several banks, charge current market rents for their properties and adding value to rental properties "wisely" to increase rental income.

Mr Trass says if investors take a long term view, there will definitely be another property boom given time.