Housing Minister Nick Smith says now is not a good time for young families to buy a house in Auckland.

Young Kiwis wanting to buy a house in Auckland should probably wait, is the advice from Housing Minister Nick Smith.

He admitted housing was unaffordable for first-home buyers in the city due to a number of pressures that would only be eased slightly by new lending restrictions proposed for property investors.

"People should be patient," Smith said on RNZ.

"The housing market in Auckland - [it's] probably not a good time for a young family to buy. I think the general commentary is that that market is overheated."

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The Reserve Bank revealed plans on Tuesday which would mean only 5 per cent of lending to residential property investors could be to borrowers with less than a 40 per cent deposit.

"It's only part of the package and what housing requires is a team effort from Government, from Reserve Bank, from councils and from the private sector," Smith said.

"Urgent measures are required on an ongoing basis to respond to the very high population growth and the pressures of the housing market."

The Government's 'Welcome Home' scheme was exempt from these Reserve Bank limits, he pointed out, allowing some homebuyers to only have a 10 per cent deposit, instead of 20 per cent.

The minister also said immigration was "absolutely" contributing to rising house prices.

A report from Waikato University revealed migration that the government controls (ie. visas) had a "negligible effect" on housing, he said. However, immigration the Government doesn't control (eg, Kiwis coming home, Australians coming over) was clearly creating "population pressure".

"What's actually gone on here is that we've had a set of rules that doesn't actually allow Auckland to grow either up or out, as a consequence supply has been tightly constrained - a failure of regulation.

"We regulate so hard that we don't let the private sector build the houses and then we come along and say 'Well actually now the Government has to come and build them". No. We have to deal with the core issue and that's the rules that have prevented the private sector from building the houses that a city like Auckland needs."

Smith told RNZ the issue would come to a head this Friday where the unitary plan would be reported to Auckland Council.

The council would then make a decision by 19 August.

Auckland wasn't the only housing market the Government was concerned about, Smith said. Queenstown, Hamilton and Tauranga prices were over-heated, Christchurch house prices had risen 3 per cent, and Wellington had an increase of 10 per cent in the last year.

Opposition parties have criticised the Government for failing to fix the housing shortage and slow down inflation. Labour and the Greens have welcomed the Reserve Bank proposals.

Green Party finance spokesperson Julie Anne Genter said Smith had finally recognised what people in Auckland have known for a very long time - that houses are too expensive.

"The next step is for the Government to start building thousands more affordable homes and crack down on property speculation," she said.

"The Government has been stuck in denial about the housing crisis, while first home buyers have been moving through the other stages of grief: anger at the Government's inaction, bargaining with banks to get a bigger mortgage, and depression at constantly being outbid by property speculators.

"We cannot leave the housing crisis to the Reserve Bank alone to solve with new lending restrictions. We need more affordable housing being built and stronger action to stop property speculation."