The Reserve Bank could expand mortgage lending restrictions or take even more radical measures in an effort to head off the housing boom as it rolls down the country, economists say.

This could see deposit requirements lifted for investors in the Auckland region and the reintroduction of tighter nationwide restrictions for all borrowers.

Economists at both Westpac and ASB are now tipping the Reserve Bank will beef up powers to help it tame house prices without having to raise interest rates.

Tightening, or expanding the geographic reach of, loan-to-value ratio (LVR) restrictions - which determine how big a deposit buyers need - are the most likely options because there is already legislation in place, said Westpac chief economist Dominick Stephens.

Currently, most Auckland investors require a deposit of 30 per cent, and other borrowers are required to have a deposit of 20 per cent under the LVR rules.

Another, more radical option, which is available under existing legislation, is to require the banks to hold more capital and restrict their ability to lend on property. Independent economist Shamubeel Eaqub argues this would be more effective than tinkering with the LVRs.

"Now that we are limiting investors in Auckland, they are going elsewhere," he said. "We are chasing the problem around rather than clamping down on the fundamental issue: the banking sector lending great amounts of money for property."

A third option was to come up with new tools, such as debt-to-income ratios - restricting the amount house hunters can borrow according to how much they earn.

The Reserve Bank's next opportunity to address the issue comes on May 11 when it releases its latest financial stability report.

Meanwhile, an Auckland community housing leader has warned rents could jump by 20 per cent or more once the heat comes out of the "pressure cooker" Auckland market.

Most landlords were still more than covering their mortgage costs and making profits through capital gains, which had climbed to almost 15 per cent. "However, if capital gains start to flatten then rents will be expected to cover all the costs of operating a property," he writes in an opinion piece published in the Herald today.

It was likely that many landlords would not raise their rents this much because of tenant objections. But this would only restrict the supply of desperately needed new housing, as landlords would be unwilling to take on more properties at a possible loss.

Property Investors Federation executive officer Andrew King said rents were far less volatile than house prices and were likely to adjust more gradually to any market changes.

Tax on vacant properties touted

A group in Melbourne are proposing owners who leave their homes empty for more than 12 months face a tax. However, the New Zealand Property Institute says there's no place for a vacancy tax here.

Chief executive Ashley Church said he understood the motivation behind the idea, especially when many houses were sitting empty in Auckland.

"The solution to that problem is to improve the supply of houses as quickly as possible.

Source: NZHerald