The International Monetary Fund (IMF) has warned that tackling New Zealand's housing crisis will need a "comprehensive approach", suggesting the Government should consider introducing a capital gains tax.
On Friday, the influential economic organisation released preliminary findings from its "Article IV Consultation" report on New Zealand.
The report said the Government's sound management of the COVID-19 crisis had enabled a faster-than-expected economic recovery, but noted some sectors had suffered more than others.
It predicted economic recovery would continue at a moderate pace in the near term due to the country's closed borders.
As well as the potential for more COVID-19 outbreaks in the community, the report also highlighted the country's housing crisis as a "significant risk", noting "the rapid rise in house prices raises concerns around affordability and financial vulnerabilities".
The organisation said measures were needed to unlock the supply of houses and dampen speculative demand.
Although the reinstatement of loan-to-value restrictions in March and further tightening of investment rules in May would "help mitigate risks", additional tools could play a useful role in addressing housing-related risks, the report found.
Those tools included debt-to-income ratio limits, caps on investor interest-only loans, and higher bank capital risk weights on mortgage lendings.
The report said freeing up land supply, improving planning and zoning and "fostering infrastructure investments to enable fast-track housing developments" were also critical to achieving long-term housing affordability.
The organisation also touched on the issue of capital gains taxes, something Prime Minister Jacinda Ardern ruled out last year.
"Mitigating near-term housing demand, particularly from investors, would help moderate price pressures.
"Introduction of stamp duties or an expansion of capital gains taxation could reduce the attractiveness of residential property investment, the report said.
"The authorities should differentiate in these approaches between first home buyers and investors, while continuing to provide selective grant and loan assistance to first-time buyers."