The Government has surprised the market with a stronger than expected move on property tax.
Coming just days after the Reserve Bank moves to restrict bank lending to property investors, it sends a strong signal that the risks of an Auckland property bubble are now universally accepted at an executive level.
It's also shrewd politics. Introducing new rules now undercuts opposition calls for action going into Budget week.
National's traditional allies in the finance sector will applaud the moves, having felt for some time that tax law gives property an unfair advantage over other investment classes such as equities.
The new rules also include the first tentative steps to bring some kind of regulatory rigour to foreign investment in housing by requiring all investors to register with the IRD.
But they have stopped short of major structural change that would really knock the Auckland market back on its heels.
The Property Investors Federation has accused the Government of bowing to public pressure, which will only make yesterday's moves look more dramatic than they are.
Property investment sceptics will point out that these are light-handed measures - too easy for the majority of investors to navigate around.
In short, it is unlikely that the Government has done enough to get seriously offside with the property sector and the heavyweight supporters that includes.
To put these measures in perspective, the "bright line test" (as the two-year timeframe for an investment tax is dubbed) was put forward by the Treasury in a 2011 paper on capital gains tax options.
The Treasury described this as an "incremental" option but used a considerably more onerous 10-year timeframe as its example.
The Treasury also highlighted the downside to this approach, warning that it could create "distortions at the margins, eg, deferring sales in order to avoid the tax". At 10 years these sorts of deferments would have been significant deterrents for property investors.
For those looking to renovate properties for a quick turnaround, the wait won't be substantial by the time consenting and building work is done.
Still, regardless of whether sceptics see this as a "capital gains tax light", these rules may provide a framework to move forward.
If the market continues to overheat there may be scope to extend the timeframe and harden up the rules.
Foreign investment in the Auckland market also remains a hot topic and moves to require foreign investors to register with the IRD will be welcomed as a sensible first step.
In Australia foreign investment rules already go a lot further with an outright ban on all existing property, forcing investors to build new homes.
Before we can look at policies like this we must get good data on how widespread foreign investment in residential property is.
Ensuring all foreign investors must have a local bank account in order to get an IRD number also brings transparency around money laundering and deals with accusations that some of the Chinese money coming into the local market is from "corrupt sources" not sanctioned by the Chinese Government.
Overall, yesterday's announcement marks a major shift in government thinking.
Where previously there has been a sole focus on a supply-side solution to Auckland's housing issues, this move, along with a warm response to the latest Reserve Bank efforts, shows the Government is now more closely attuned to the risk of a property market bubble.
No doubt it is also acutely aware that plans to fix supply and get new houses built remain challenging.
New building is highly quantifiable, leaving the Government wide open to accusations of failure as time marches towards the next election.
With public concern growing and the rest of the country getting tired of Auckland's influence on interest rates, it makes sense to change tack.
It is doubtful that these moves are bold enough to provide a quick fix for the Auckland property boom. But they are significant step.
However, if house prices continue to soar and public concern continues to grow, the regulatory door is now open for this Government to go further still.
• Gains from residential property sold within two years of purchase will be taxed, unless the property is the seller's main home, inherited from a deceased estate or transferred as part of a relationship property settlement.
• Non-residents and New Zealanders buying and selling property other than their main home must provide an IRD number.
• Non-resident buyers and sellers must provide their tax identification number from their home country, along with current identification requirements such as a passport.
• Non-residents must have a New Zealand bank account before they can get a New Zealand IRD number.
• Rules take effect from October 1, after consultation.