New Zealand housing is already overvalued by about 25 per cent and if it continues to rise may force the Reserve Bank to hike interest rates, according to the IMF.

House prices are booming around New Zealand - with the average price of an Auckland city home rocketing to $735,692, up 12 per cent over the past year.

The Reserve Bank of New Zealand says it intervened in foreign exchange markets in an attempt to drive the kiwi lower. It gave no details of the size of the intervention.

The Reserve Bank would impose limits on riskier mortgage lending with smaller deposits if it judged those loans to be a "significant risk" to financial stability.

Increasing pressure in a housing market where supply is failing to meet demand is posing a growing risk to our financial stability, says the Reserve Bank.

The dollar rose as much as 0.7 per cent against the greenback after Reserve Bank governor Graeme Wheeler backed off from talking down the currency at today's monetary policy review.

"While there's been much hand-wringing over housing prices, is intervention by the Reserve Bank really the answer?" asks David Tripe.