The Reserve Bank has identified residential property investment as a sector which needs greater restrictions if Auckland's overheated housing market is to be cooled off and a housing "correction" avoided.
The bank is already considering options to make it harder or more expensive for residential property investors to get bank loans.
But a speech by deputy governor Grant Spencer yesterday suggested measures aimed at investors were a step closer.
Mr Spencer said that since September, the pressures on housing had become "more accentuated, particularly in Auckland where the supply shortage is greatest".
After a period of falling house prices brought on by tighter lending restrictions, housing pressures re-emerged in September 2014, driven by record migration levels, low interest rates and more aggressive lending by banks.
"House prices as multiples of income and rents are already near record levels and further increases will accentuate the risk of a sharp price correction once demand and supply come in to closer balance," Mr Spencer said.
The proportion of houses bought by investors had increased -- nearly 38 per cent in February, compared with 33.8 per cent in September 2013.
Mr Spencer did not go as far as advocating a capital gains tax, but said alternative measures were needed to address the rise in investor housing. "Investors are often setting the marginal market prices that are then applied to the full housing stock within a regional market. Indicators point to an increasing presence of investors in the Auckland market and this trend is no doubt being reinforced by the expectation of high rates of return based on untaxed capital gains," he said.
Prime Minister John Key said yesterday that the Government was unlikely to veto any move by the bank to crack down on investors.
He said he supported the bank looking at alternative measures to address bottlenecks in the housing market, otherwise they would eventually have to raise interest rates, hurting all households and businesses.
But he said property speculation was only one factor behind high house prices, which were also being driven by record migration and low interest rates.
Labour leader Andrew Little says Mr Spencer's speech effectively said there was a housing crisis -- something Mr Key had refused to accept.
"The Reserve Bank is still gamely trying to stem the flow of the problems in the housing market by looking at options to make it riskier for banks to lend to investors than the average family looking to buy a home," Mr Little said.
The bank's comments came as Building and Housing Minister Nick Smith began a PR offensive on the Government's new perks for first-home buyers. Dr Smith held a public meeting in Henderson last night and will take his KiwiSaver HomeStart roadshow to Nelson and Christchurch this week.
On April 1, the Government doubled the HomeStart grants for first-home buyers and allowed greater withdrawals from KiwiSaver for people on modest incomes. A couple buying a new build can now get a subsidy of up to $20,000 if the house is under a price cap. The cap is $550,000 in Auckland.
By Isaac Davison of the NZ Herald
