Prime Minister John Key has expressed further frustration about the Reserve Bank's response to rising house prices, saying that it should not need any more time to investigate stricter rules for property investors.

Reserve Bank deputy governor Grant Spencer last night said that the bank was considering new loan-to-value ratio (LVR) restrictions, but would not introduce them before the end of the year.

Watch: NZ Herald Focus - House prices, the Reserve Bank and immigration:

Spencer also told the Government to get its own house in order, by taking another look at its immigration and tax settings.

On Wednesday, the Prime Minister had urged the bank to target investors with tougher lending rules, saying it should "just get on with it".


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Speaking to today, Key said he was aware at the time that the bank was not going to introduce further LVR restrictions immediately.

"I stand by what I said, I think they should get on with it."

Most banks and economists agreed that LVRs were required to dampen investor interest, he said.

Key appeared to accuse the bank of not playing its part in controlling the housing market.

"The bank is making the point that it is a team effort. But the Government is doing an enormous amount and local government is as well," he told

The Reserve Bank should not need more time to research the potential impact of tougher borrowing limits, he said.

"We're not critical of the bank, but we're just simply saying it's not like they don't understand LVR restrictions.

We gave them that tool in the toolbox, they know exactly how to do it, and they can do it very quickly.

Prime Minister John Key

"We gave them that tool in the toolbox, they know exactly how to do it, and they can do it very quickly."

In an unusually direct comment on immigration policy, Spencer told the Government yesterday to review the number of people moving to New Zealand, as the impact of high net migration on housing could not be ignored.

In response, Key told that the biggest changes to net migration levels had been caused by New Zealanders staying at home, and more Australians moving across the Tasman.

Neither of these migrant categories could be controlled, he said.

The number of student and working visa holders was also high, but they were more likely to rent than buy property.

Key agreed that skills categories for migrants should be constantly under review, and said that the Government had already removed 50 skills from the list.

"The counter argument to all of this is if these people are coming in to support another industry, they in fact make the waka go faster, they don't actually slow things down," he told

The Reserve Bank's advice on immigration was welcomed by New Zealand First leader Winston Peters.

In a media statement this morning which was sarcastically titled "News Flash", he said: "So it is official. Mass immigration is the cause of the housing crisis.

"Now watch the Reserve Bank being accused of being racist and xenophobic."