The New Zealand dollar has surged following a speech by the Reserve Bank about the housing market.

Reserve Bank (RBNZ) Deputy Governor Grant Spencer warned that a severe correction in the housing market could pose risks for the financial system and the economy.

The RBNZ did not unveil any new policy measures to curb property prices, but Mr Spencer signalled tougher deposit requirements would be introduced by the end of the year. Debt-to-income limits could be introduced next year.

Some analysts had expected new measures would be introduced sooner than that. The speech has left some traders thinking there is now less chance of a cut to the Official Cash Rate next month. Any cut could fuel the already hot property market.

More British commercial property funds have suspended withdrawals as concern and uncertainty grows about the economic effects of the UK's decision to leave the European Union.

The RBNZ would like to lower interest rates to bring down the dollar and to help lift inflation to its target level. But it knows that lower rates would encourage borrowing.

In his speech to the New Zealand Institute of Valuers, the RBNZ's Deputy Governor Grant Spencer said the Bank cannot influence the supply of housing.

Mr Spencer said lowering house prices is a "team effort."

The Government might want to consider reducing the tax advantage of investing in residential housing.

Newshub.