Prime Minister John Key says falling home ownership in New Zealand is partly the result of people marrying and having children later in their lives.

The Reserve Bank revealed last week that nearly half of homes in Auckland were being bought by investors, raising concerns that a generation of New Zealanders could be shut out of owning a home.

Mr Key, speaking to Radio New Zealand this morning, said home ownership rates had been falling since the mid-1980s.

"It partly reflects a number of changes though, societal changes - people buying houses later, getting married later, having children later."


The Prime Minister said the Government "might need to more" to address housing affordability issues, but defended its response so far.

"It isn't like we've sat on our hands and done nothing - it's everything from bright line tests right through to Special Housing Areas to reform in so many areas."

Labour leader Andrew Little said blaming societal changes for falling ownership rates showed Mr Key was "out of touch".

"Perhaps the fact that it now takes 50 years to pay off the average Auckland house is deterring more people from buying a house than decisions to have children a few years later.

"On top of that Auckland families are competing with investors who, according to the Reserve Bank, are snaffling 46 per cent of the houses for sale in the city."

Mr Key - who again resisted labelling the Auckland housing situation a "crisis" - said the Government had introduced the "bright line" test to target investors, but the Reserve Bank could take further action.

"I think it's one of the issues the Reserve Bank can give some consideration to, because they can target groups, just like they did with their LVR ratios, and they are looking at income ratios, they have the capacity to look at that," Mr Key told Radio New Zealand.

Debt-to-income restrictions are already used in the United Kingdom, where most buyers cannot get a mortgage higher than 4.5 times their annual earnings.


Asked if he would support similar restrictions here, Mr Key said, "potentially".

Last week the Reserve Bank left the official cash rate at 2.25 per cent, with Governor Graeme Wheeler flagging rising house prices as a risk to the country's financial stability.

Wheeler said investors could soon be targeted by new Loan to Value lending rules. He could not give detail on how restrictive any new LVR rules could be.

The Loan to Value ratio (LVR) is the amount of a loan compared with the value of a property. It is calculated by dividing the amount of the loan by the value of the property.

Last November the Reserve Bank tightened LVR rules to rein in Auckland investors, ensuring banks demand 30 per cent deposits for a mortgage secured against an investment property.

Watch: Auckland resident speaks out about empty houses and sections:

Wheeler said work was being done looking at separate income-related restrictions on mortgage lending.

However, any introduction of debt-to-income restrictions would be complex, and LVR changes could come first.

Because most lending that is high debt-to-income is to investors, the Reserve Bank's view is that, set at the right threshold, debt-to-income restrictions will impact investors more than owner-occupiers.

The Government has a Memorandum of Understanding (MoU) with the Reserve Bank on which tools it can use to curb mortgage lending. The MoU would have to be amended before an income cap could be introduced.

Bank of New Zealand on Friday joined ANZ Bank New Zealand and Westpac's local unit in restricting mortgage lending for foreign property buyers, following similar steps by their Australian parents.

Mr Key told Newstalk ZB this morning that bank chief executives had told him that lending to such buyers was "extremely low".

"Blunty, I'm not putting it in the category of a stunt, but my understanding is the amount of lending that they do to non-related foreign buyers is very low."