New lending restrictions to be imposed on Auckland property investors will do little to cool the surging market, a bank boss says.

The Reserve Bank announced yesterday that the new limits will require those borrowers to have a deposit of at least 30 per cent from October 1.

It said the danger of a sharp correction occurring in the Auckland market had increased since its November financial stability report and investors had been the key source of new demand in the city, accounting for about a third of new lending in the six months to March 31.

The Reserve Bank estimates the new restrictions could reduce Auckland's house price growth by 2 to 4 per cent.

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Bruce McLachlan, chief executive of the Co-Operative Bank, said he didn't like the term "bubble", but Auckland's housing market was "overheated" and something needed to be done about it.

However, the new restrictions would have little impact on the market because property investors tended to have at least 30 per cent equity, he said. McLachlan said requiring banks to hold more capital would be the most effective measure the Reserve Bank could introduce.

"It would restrict, full stop, the amount the banks could lend," McLachlan said.

Massey University banking expert David Tripe also said the new rules may do little to curb the inflation.

"What it will do is make the loans safer and reduce the problems for the banks if the loans go wrong," Tripe said.

Today on Mike's Minute: Mike asks the question..."what housing bubble?"

New Zealand Bankers' Association chief executive Kirk Hope said the new regulations would make borrowing more difficult for Auckland property investors. But they would have limited impact on prices, Hope said.

"The real issues driving housing affordability in Auckland are the lack of housing supply, and strong inward migration, not the availability of cheap credit."

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A BNZ spokeswoman said the bank was keen to see more detail on the rules and would work with the Reserve Bank to ensure policy changes could be efficiently implemented.

A three-bedroom North Shore "do-up" has earned its owner nearly $1000 a day - just shy of the salary of a High Court judge - in Auckland's red-hot property market. A Weekend Herald investigation into soaring house prices comes amid warnings from the Reserve Bank about the housing market and calls for immediate action by the country's chief human rights watchdog.

A lack of housing supply and strong inward migration were the fundamental issues driving housing affordability in Auckland, she said.

"We support sensible measures that help address the supply problem and the fundamental drivers of the Auckland housing market."

Vince Clark, ASB's head of home lending, said "demand side" initiatives aimed at curbing price inflation needed to be combined with measures that would address supply limitations, which remained a key driver of Auckland's housing market.

The Reserve Bank also announced yesterday that banks would be able to increase their high (more than 80 per cent) LVR lending outside Auckland to 15 per cent of new loans, up from 10 per cent. It will remain capped at 10 per cent in Auckland.

McLachlan questioned why the central bank did not simply do away with the LVRs altogether outside the country's biggest city.