House prices grew at their fastest level in 16 years in November.
(File image). Photo: RNZ / Nate McKinnon
Property research firm CoreLogic's house price index rose 2.1 percent last month, with the average house price hitting $769,013.
The index was more than 9 percent up on a year ago.
CoreLogic head of research Nick Goodall said the market remained driven by low supply, low interest rates and strong demand, and would not slow in the near term.
"You have to go all the way back to October 2004 to find a time of stronger monthly growth."
The metrics used to assess the ability to get into the market also illustrated a "worsening situation", Goodall said.
"The ratio of housing values compared to household income has jumped from 6.2 a year ago, to 6.8 at the end of [September].
"Meanwhile the average time it takes to save for a 20 percent deposit in New Zealand is now nine years, up from 8.2 years a year ago, and the share of income dedicated towards renting is increasing as well - up from 19.8 percent in [third quarter] 2019 to 21.2 percent in the most recent reading."
Goodall said all potential solutions needed to be considered.
"Cheaper and faster off-site manufacturing needs to become more prevalent, investment in infrastructure needs to increase ... town planning reform needs to be addressed and the cost to build must also be investigated, understood and probably managed better."
New Zealand needed to reduce the "obsession" of property ownership, he said.
"Promote other forms of investment for retirement. Part of the greatest appeal of property is to provide a passive form of income in retirement, improve security [and] appeal of renting, and favour investment in new builds above existing stock."
The Reserve Bank plans to reimpose loan-to-value ratios early next year, while the government has instructed departments to look at ways in which prices might be cooled.
"The concern in the short term is whether foreshadowing the reintroduction encourages investors to 'get in while they still can', thus creating some urgency, bringing forward demand and pushing prices up faster," Goodall said.