New lending restrictions for investors

The Reserve Bank launched proposals which would require only 5% of lending to residential property investors could be to borrowers with less than a 40% deposit - currently investors in Auckland require a 30% deposit.

Loans for 'new builds' would continue to be exempt from the restrictions.

Figures from QV released earlier in July showed average house prices across New Zealand rose by more than 13% in the past year, with gains spreading far beyond Auckland.

Investor lending has been increasing rapidly and is a significant contributing factor to the current market conditions. However, New Zealand First leader Winston Peters said the rules would have little impact because the problem was immigration. "There is a touching naivety, and a serious lack of being street wise, in the Reserve Bank's approach. It ignores the two great drivers - high immigration and offshore buying," Peters said. "The high immigration and offshore buying are linked particularly to the rental market. The fact is offshore investors are not being provisioned by the New Zealand-based banks for a start."