Cashed-up investors pouring money into property instead of productive ventures are making it "so much worse for others" trying to get into their first home, says Prime Minister Jacinda Ardern.
The property market went bananas in 2020, prices rising by double-digit percentages despite early predictions the pandemic and recession could see them tumble.
The average house in Auckland for example increased in value last year more than the entire annual income of the average household.
Ardern told Newshub Nation her Cabinet is still figuring out what they're going to do about it.
"I'm not going to get into hypotheticals about what we will or won't do until we've actually made some considered decisions," she told interviewer Tova O'Brien, Newshub political editor.
"Ultimately, we haven't made any decisions on anything."
She hasn't ruled extending the bright line test in or out, for example - reiterating the only "lever" that's off the table is a comprehensive capital gains tax.
"There were some who were predicting the housing market would collapse and in a few short months, it has just been exponential, what we've seen. We have to respond to that. People have honed in on certain levers that exist. We've said, look, we've asked for advice. Let's wait for that to come to us and make those calls."
Asked if the Government might introduce a cap on how many properties an investor could have in their portfolio, Ardern that might lead to property investors restructuring their investments to hide their assets.
"We do know that investors in the market are adding to a lot of the heat in the market. That's a given. We can see that from all of the data.
"But, of course, whenever you're looking at what you could do to try and adjust people's decision-making, you've also got to keep in mind that, you know, simple ideas of caps and things, people can re-orientate the way they structure their investments to hide some of these issues. So it does become quite tricky.
"But no doubt the number of investors going in is part of the issue. What we want them to think about doing is how can you contribute to the productive economy in New Zealand? By going into an overheated housing market, it makes it so much worse for others and you won't necessarily get the long-term benefits that we'd like you to get."
The grants available to first-home buyers - up top $10,000 per person - are miniscule compared to the deposits banks typically require (a 20 percent deposit on the median Auckland property would be $200,000); are only eligible for homes that come in under extremely low price caps (eg. $600,000 for an existing dwelling in Auckland).
Ardern said while she wants to offer more support to first-home buyers, admitting the dollar amounts are low, there were pitfalls with that approach.
"One of my concerns is that there are people right now who are paying enough in rental to be able to service a mortgage. What they can't do is, while they're paying that high rental, is save up enough for a deposit. So that's what those grants do. They help with that.
"One of the issues that we've constantly had coming back from the likes of Treasury is if you just add extra support for first time buyers and you haven't got enough supply, you just continue to put heat in the market. Now, I'm going to keep pushing on some of that advice, keep testing the edges of it, because I am really determined that I want to see us tilting the support towards particularly first-home buyers."