The introduction of loan-to-value ratio (LVR) mortgage restrictions may have backfired by increasing foreign speculation and shutting out first home buyers in the regions, the Labour Party says.
The party's finance spokesperson Grant Robertson said documents released by the Treasury last night confirmed the party's concerns over LVR restrictions introduced by the Reserve Bank in 2013.
The documents showed the Treasury was concerned the original LVR policy might have supported an increase in investor activity.
Mr Robertson said it was clear the LVR restrictions had had a negative effect on the provinces.
"It was very much a shot across the bow from the Treasury to the Reserve Bank - saying to them that they believe that there are consequences from the LVRs that not only will encourage property speculators, but also put pressure on people in the regions who want to try and buy their first home."
Mr Robertson said the Government must take action to stop foreign speculation pushing house prices out of reach.