An auction manager says banning house auctions would be like "shooting the messenger", after Reserve Bank Governor Adrian Orr partially blamed the sales method for pushing up house prices.
Nervous bidders filled an auction room on Auckland's North Shore on Thursday.
"It's just really rushed and you do feel like you're missing out," bidder Sandy Chan told Newshub.
Another bidder, Gal Thompson, said she expected to have to pay more than what the property is worth to secure it. But despite that attitude, Thompson failed to secure the house she bid on.
Reserve Bank Governor Adrian Orr told The AM Show on Thursday that it's concerning.
"It's been investors primarily who have been getting in, getting pretty carried away," he said.
Now, the Reserve Bank will have to take those concerns into account when making financial policy decisions, following a directive from Finance Minister Grant Robertson to dampen investor demand.
"This is an important step forward that the Reserve Bank, in all parts of its work, will now be considering the sustainability of house prices and how we can support first-home buyers," Robertson said.
Orr had some advice for them as he blamed auctions, at least partly, for pushing up prices.
"Any type of market that creates a frenzy or the FOMO (fear of missing out), does create irrational behaviour," he said.
"Don't get caught up in it; understand yourself, understand your earnings power - that's unrelated to who might be standing in the auction beside you - and hold strong. Don't get caught up in the frenzy."
However, Orr stopped short of saying they should be banned.
Barfoot and Thompson's auction manager Campbell Dunoon agreed it wasn't the right course of action.
"It's a shooting-the-messenger-type thing, and I don't think the Governor said anything like that this morning but there has been a bit of chatter about it in the media - but we're simply bringing buyers and sellers together and they're sorting it out. We're simply the middlemen."
Housing Minister Megan Woods says a range of housing initiatives are still up for discussion, but said she's not actively considering banning auctions.
Thursday's directive to the Reserve Bank is just one part of the Government's plan to cool demand. Robertson said that the main part is still to come.
An announcement on that is expected around mid-March, but in the meantime, Robertson wants the Reserve Bank to check on two factors that could skew the market too much in favour of investors.
The first is interest-only loans, which as an example, an investor could use if they can charge rent to cover the interest payments and hold onto the property until the price inflates enough that they can sell it again for a profit.
The other is debt-to-income ratios, which restrict how much a bank can lend someone based on their income.
Robertson wants clarification these will not apply to first-home or low-income buyers. The Bank says it will respond in due course.