While the report stopped short of imposing new lending restrictions, some commentators are saying the press conference was a way to inform the public and flesh out thinking before taking action. The RBNZ has been worried about the New Zealand property sector for a while now, especially in the highly competitive Auckland market. While conditions have cooled a little over recent months, a severe lack of supply and increasing sales volumes have highlighted concern about the resumption of unsustainable house price growth.

The average house in Auckland is now worth nine times the average income of residents, making it one of the most expensive cities on the planet. According to Wheeler, "Auckland is 70 per cent higher in terms of that ratio than the rest of the country, so that's a concern," adding that in Tauranga and Hamilton house price inflation was growing at 18-25 percent, meaning "it's not just an Auckland issue." With record prices just reached in Waikato/Bay of Plenty, Taranaki, Canterbury/Westland, and Otago, there are concerns the Auckland bubble could spread.

If these new restrictions do come into play, they are only likely to have their intended effect if supply issues are also addressed. In his statement, Wheeler urged all levels of government to take action: "Reducing the imbalance between housing demand and supply in the Auckland region remains essential if house price appreciation is to be contained over the longer term... Increasing housing supply is key and further efforts on a range of fronts should be considered to address the supply and demand imbalance. These include measures such as decreasing impediments to densification and greenfield development, and addressing infrastructure and other constraints to increased housing supply."

Income-based restrictions would be designed to prevent people borrowing too much relative to their income, with any implementation needing to weigh up effects on investors, owner-occupiers, and first-home buyers accordingly. According to Spencer, "You would have to think about the impact on first-home buyers", especially in very expensive locations like Auckland," adding that any new scheme "would probably impact investors more than first-home buyers. You could differentiate between investors and owner-occupiers. I'm not saying you would but saying what the possibilities are."

Prime Minister John Key said while he did not want restrictions imposed, he would consider any official requests made by the central bank: "If there are recommendations, the Government's not ruling out adopting those recommendations or allowing the Reserve Bank to do it," Key told reporters in Parliament, adding "Certainly we don't want that to be the case - we want people to have that opportunity of being in the housing market."


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