A high profile academic is urging the country to change its economic direction before being forced to do so by a financial crisis.
Jane Kelsey has told an Insight investigation that New Zealand, along with other affluent countries, is in a state of denial about where the economy is heading.
Listen to Insight: Future Financial Stability
Two months ago the Reserve Bank identified three areas of the economy as posing the most risk, and since then those three have become even more precarious.
The Auckland housing market continues to soar upward, dairy prices are still in the doldrums and there is volatility on the global front with Greece at crisis point and the stock market in China a focus of concern.
In the Reserve Bank's report on financial stability Governor Graeme Wheeler described New Zealand's financial system as sound and effective, but he warned of the increasing risk of easy global financial conditions unwinding in a disorderly fashion, disrupting the cost and availability of funding.
In a book to be released shortly Auckland University professor Jane Kelsey argues New Zealand is overly reliant on real estate, insurance and financial markets, all creating a threat to financial stability. She focuses on a check-list, developed by some IMF researchers, of triggers for financial future crises, based on analysis of past events.
"I'm sad to say New Zealand ticks every one of those boxes.
"Our level of debt, not public debt...but private debt, the debt owed by the banks internationally and owed by ordinary households is where out real vulnerability lies," she says.
Debt, both public and private, worries Kim Campbell, the chief executive of the Employers and Manufacturers Association, who would like a greater focus on the amount of money owed to bankers overseas. He acknowledges that New Zealand is in a relatively good position compared with other OECD countries. But he thinks the answer here and for the rest of the world is for the surplus money to be used productively for assets such as schools and roading.
"Then you will see a recovery in the world because those assets are there for the long haul, they make your world more efficient and they employ people while they are being built."
The Executive Director of the New Zealand Initiative, Oliver Hartwich, would also like to see economic alternatives where the country does well separately to the buying and selling of houses. He backs greater overseas investment and development of natural resources, but wants the housing market to be disentangled from economic performance.
"Whether the housing market goes up or down it has an impact on consumption; it has an impact on consumer confidence, so we have become addicted to rising house prices and it's a dangerous addiction.
"The dependence on housing is not very good for the country because as an individual you can get rich on the back of rising house prices, but as a country individual you can't," he says.
But it's not just the housing sector where debt has built up. Agricultural land in New Zealand is some of the most heavily indebted in the world as huge loans have been taken out for dairy farm conversions during times of high returns. But the slump in diary prices has tightened the screw. Dairy NZ says most farms will run at a loss this season.
It wouldn't be just farmers, but whole rural communities that would be affected by the downturn, according to Agri-consultant Alison Dewes.
"But maybe a bit of pain for New Zealand isn't all bad; it will help us transition to more sustainable and resilient farming.
She argues there was a need for a whole lot of new thinking in the dairy sector as well.
"We have to stop believing some of the things we've been told before - that growth can occur forever, that New Zealand will always have a clean and green image and we'll never have to prove it, that we can carry on borrowing, that the environment will continually absorb everything we throw at it."
She says that to get ahead farmers need to be driven by profit, not production.
Professor Kelsey is not confident that leaders are ready to address the causes behind the escalating debt which, she argues, leave New Zealand so vulnerable. Although she acknowledges talk of a possible bursting of the property bubble is now giving impetus to discussions around change.
But she says all the mainstream political parties are too scared to talk of future alternatives because that would lead to dire warnings about credit downgrades and investor flight, meaning they wouldn't bite the bullet.