Westpac New Zealand boss David McLean says Auckland's heated property market will continue to surge ahead as long as a "supply and demand imbalance" exists.

Speaking after the bank reported a 2 per cent lift in half-year cash earnings to $445 million, he said government and Reserve Bank measures have had limited impact and more regulatory tools may be needed to cool the market.

"While that big supply and demand imbalance exists we won't see [the market] flatten off," McLean said. "Regulatory changes can take the heat out of it, but it's like a lid on a pressure cooker at the end of the day."

Measures already introduced include a capital gains tax on investment properties bought and sold within two years, requiring non-resident buyers to get an IRD number and New Zealand bank account and loan-to-value restrictions on borrowing.


The Reserve Bank faces a conundrum as it struggles to manage conflicting economic pressures.

It needs to keep rates low to spur inflation - currently tracking at a 0.4 per cent annual rate - back to within a target range of 1 to 3 per cent, while also being mindful of the impact low interest rates are having on the heated housing market.

"I would say that we haven't seen the end of macro-prudential interventions [aimed at cooling property prices] by the Reserve Bank," McLean said.

The median house price in Auckland jumped to $820,000, past $800,000 for the first time, in March and was up 14 per cent from a year earlier, according to Real Estate Institute of New Zealand figures.

Westpac New Zealand grew its mortgage lending by 6 per cent, to $43.4 billion, in the six months to March.

The bank said it had been taking a "measured approach" to home loans.

Total net loans rose 8 per cent to $71.7 billion.

McLean said the bank had carried out stringent "stress testing" on its mortgage book.

"We're very comfortable with the shape of our portfolio and the quality of our book," he said. "Even under really adverse stress scenarios we can't get to scary numbers on the losses."