The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing as part of efforts to cool the over-heated Auckland property market.

Deputy governor Grant Spencer said in a speech to the Rotorua Chamber of Commerce that housing market imbalances "are presenting an increasing risk to financial and economic stability" in New Zealand.

The government and Auckland Council could also focus on increasing designated areas for high-density housing, because building more apartments was "the best prospect for substantially increasing the supply of dwellings over the next one or two years".  He said that "The Reserve Bank would like to see fresh consideration of possible policy measures to address the tax-preferred status of housing, especially housing investment,".

The bank is also consulting on a new asset class for residential investment mortgages that will attract a higher risk weighting than owner-occupier mortgages

Source: NZ Herald