The Reserve Bank's surprise move to ease loan-to-value ratio restrictions will be welcomed by first-home buyers who are increasingly well placed to take advantage of a slower market.
The amount of lending the banks can do to owner-occupier buyers with less than a 20 per cent deposit has been increased by 50 per cent (from 10 per cent of lending to 15 per cent).
Whether the major banks actually have an appetite to increase their lending on that scale is uncertain.
They have been increasingly cautious in the past year and Reserve Bank numbers for the year to June showed they were barely lending enough to bump up against existing restrictions.
But regardless, the move by the Reserve Bank signals confidence that the slowdown of the housing market is well advanced - and it is set to continue to ease.
Reserve Bank Governor Grant Spencer said the move was not sparked by fears that the market would slump.
"We don't see a collapse of house prices as a particularly high risk, so we're not acting because we see things about to fall off a cliff," he said.
But it was a response to the ongoing moderation of the market and the expectation that new Government policies would see the trend continue.
His message to first-home buyers was to "continue to be cautious".
Meanwhile, there was only as slight loosening of restrictions for property investors.
At the moment rules allow only 5 per cent of lending to investors to be to those with a deposit of less than 40 per cent.
That will be altered to allow 5 per cent of lending to those with deposits of less than 35 per cent.
ANZ chief economist Sharon Zollner said the easing of restrictions in increments was not a surprise but the move had come a couple of months sooner than many had expected.
"It's pretty clear that the housing market is slowing markedly and we now have house price inflation of about zero," she said. "So the conditions have been met for the Reserve Bank to ease off the brake a little."
These moves would make it a bit easier for some first home buyers to get into the market, Zollner said.
While some people had argued that first-home buyers were hard done by with the LVRs, it was worth considering that with Auckland market falling in the past year most would have saved more and now be in a better position to buy, she said.
"It's probably a more pleasant market to be in," she said.
Although she acknowledged that listings were down which meant there was less choice out there.
"But there's not the sort of pandemonium that there was."
Zollner said she did not expect this loosening of rules to boost house prices significantly.
"We expect the market to stay on ice," she said. That was partly for cyclical reasons and partly due to the new Government policies.
But as long as there was no sharp rise in interest rates or in unemployment - hitting people's ability to service mortgages - then there was no reason to expect a sharp slump, she said.