For the first time, the Reserve Bank has signalled the controversial mortgage lending restrictions could be scrapped by the end of the year.
In a speech on Friday updating the New Zealand housing market, bank deputy governor Grant Spencer said the seven-month-old Loan to Value Ratio measures had worked well and could be removed late this year, all going well.
Some in the housing sector argue it should be sooner but other players are equally convinced it is more likely to be next year.
The possibility the LVR could be gone by the end of the year has been welcomed by real estate firms but the hurdles remain formidable.
Radio New Zealand's economics correspondent Patrick O'Meara said too few houses were being built to satisfy demand in Auckland, while the central bank wanted to be sure rising immigration would not re-ignite the market.
The chief executive of real estate firm, Harcourts, Hayden Duncan said the restrictions should go sooner rather than later because they had hammered the provinces, where the market had not been overheated.
"I don't think there's any harm in bringing it forward, in that the impact that's had has been on the markets that it was never intended for and that was provincial New Zealand."
Mortgage broker Bruce Patten said the lending restrictions were depressing regional markets while failing to curb house prices in Auckland and Christchurch.
Some analysts said, realistically, it could be next year before the measures were dropped.
The Bankers Association said the Reserve Bank should consider loosening the restrictions before eventually removing them, to help first time buyers.
Mr Spencer also warned mortgage interest rates could be as high as 7 or 8 percent in two years.
He said the supply of housing was starting to improve but an overall shortage remained. Large increases in building were required in Auckland and Canterbury to ease that problem.
Mr Spencer said the LVR restrictions were achieving their purpose and at this stage the earliest date for beginning to remove them was late in the year.
The rules limit the amount of mortgage lending banks can make to people with deposits of less than 20 percent.
Mr Spencer said although the restrictions were a temporary measure, the central bank wanted to be confident the housing market was responding to interest rate increases before it removed the limits.
The Reserve Bank also wanted to be sure immigration pressures would not re-ignite house price inflation and it would take time for it to be reassured on these matters.
He repeated previous Reserve Bank comments that the pace of future interest rate rises would depend on how the economy developed and in particular on the direction of the New Zealand dollar and housing market pressures.