The Reserve Bank has sent some very strong signals to the home-lending banks that it wants them to curb their riskier mortgage lending.
It will require banks to hold more capital against their riskier loans from the end of September, which will result in an average increase in banks' capital held for housing of about 12%.
That will make such loans more expensive for the banks.
The reason the bank is doing this is because it's worried about what might happen if house prices, which it regards as already over-valued, rise even more and then later collapse, as they did in the US.
Fuelling the Reserve Bank's concerns, risky lending - providing mortgages to people with less than a 20% deposit - has grown from 23% of new mortgage lending in October 2011 to 30% now.
Deutsche Bank economist Darren Gibbs said he can't see house prices falling unless the economy changes dramatically.
He says typically for house prices to fall there would need to be either too much construction as in the US or a very significant economic downturn and a large rise in the unemployment rate.
Deutsche Bank does not provide mortgages in New Zealand.
UBS economist Robin Clements said impact of the Reserve Bank's move will have on the banks' behaviour, is not yet known.
He said it could be passed on as an additional interest rate cost to prospective borrowers which would tend to dampen demand for borrowing.
Massey University head of banking studies David Tripe said the Reserve Bank seems to have jumped the gun, bypassing its current consultation process, and he questions the need for such a move.
"Certainly the work that I did in the lead up to that consultation process suggested that in fact house price rises, and bank lending for housing, were not in fact growing at an alarming rate if you looked at some sort of historical perspective on how those have grown in the past."
Mr Tripe says the central bank's move may have unwanted consequences.
He says the question is whether it's possible to slow down house price growth in Auckland and Christchurch without starting to cause house price falls in other parts of the country.
Mr Tripe says it may be a policy that looks good in some respects but has some side effects that are rather unfortunate.