With house price hysteria reaching fever pitch the Reserve Bank today shares its view on the risks the market surge poses to the economy.
Yesterday Finance Minister Grant Robertson revealed he had written to the Reserve Bank asking it to consider house prices more closely in its monetary policy remit.
The Reserve Bank's six-monthly Financial Stability report stands distinctly apart from its monetary policy brief.
It is designed to assess the macro-economic risk caused by debt levels across a range of sectors, including business, commercial property and farming.
Regardless, economists expect to see residential house prices dominate the discussion when Reserve Bank Governor Adrian Orr fronts for a press conference at 11am.
The Reserve Bank has already indicated it will bring back Loan to Value Restrictions to cool what it believes is a rise in high-risk mortgage lending by the major banks.
That means there is little of substance due in today's report - other than a sense of how seriously the RBNZ sees the issue.
"Despite the RBNZ having already signalled the LVRs (loan-to-value restrictions) on mortgage lending will be re-imposed next March, discussions on financial stability risks from housing are likely to heavily feature," says ASB economist Chris Tennent-Brown.
"The RBNZ will potentially try to talk the housing market down and may signal it is looking at other measures to slow housing lending."
"The message will be that banks will need to play their part to bolster business lending, not further ignite the housing market, and to maintain sound lending standards – a tricky balancing act."
"There will obviously be a strong housing focus in this," said BNZ chief economist Craig Ebert.
"At the same time, we shouldn't let New Zealand's obviously hot housing market detract from the Bank's [Financial Stability Report] discussion about the economy's myriad other areas, and how these are doing in the Covid environment.
"What about commercial property, for instance, in its various guises and tiers? How about commodity exporters, especially given the Bank's long-time focus on dairy debt? And what about the insurance and consumer finance sectors, with respect to financial stability?"
Yesterday Robertson confirmed he had written to the Reserve Bank Governor "to seek his advice on possible ways the Reserve Bank can support the Government to meet its economic objectives, in particular with relation to house prices".
"One proposal I am seeking advice from the Reserve Bank on is whether to include stability in house prices as a factor for consideration in the remit when formulating monetary policy," Robertson said.
"With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank may contribute to a stable housing market."
He was careful to emphasise that he was not suggesting the Reserve Bank bears responsibility for house prices, "but simply that it should have regard to something that is influenced by monetary policy".