Property investors say a debt-to-income ratio tool will limit the number of rental properties available.
Finance Minister Grant Robertson has agreed in principle to let the Reserve Bank limit lending according to a person's income, rather than letting them leverage off the value of their existing assets.
Robertson wants any upper limit to target the kind of borrowing terms typically only offered to investors - who often rely on existing assets, rather than income, to secure a mortgage to buy more property.
Property Investors' Federation chief executive Sharon Cullwick says this will have a deterrent effect on landlords wishing to buy.
She says while the main government objective is to help first-home buyers get on the ladder research shows only 25 per cent of tenants could actually afford to buy their first home at the moment.
"You've still got 75 per cent of people that are going to be tenants and will carry on being tenants, however what this will do is decrease the supply of houses."
Landlords looking at their debt-to-income won't be able to buy their next property as fast, she said.
Cullwick said rents in Auckland have fallen because of supply.
"I know in certain areas of Auckland, the North Shore for example, there's an over-supply of rental properties.
"But what I think you may find too are some of those houses, because you don't have the tourists coming into the country, you may find some of those were Airbnb, short-term accommodation and now they've turned them into long-term rentals."
The most recent statistics show year-on-year house prices still running at 30 per cent in some areas.
Cullwick said it seems to be slowing.
"It will take time for things to come through because some people have got their loans approved and also approved for three months so they can still go ahead and purchase."
She didn't think the market could be predicted for another six months.
"There has been quite a few investors that have decided to sell one or two properties to just help their portfolios with the interest deductibility.
"There are some slight changes that are happening but I think it's really too early to say what's happening in the market."