Property investors are increasingly taking out interest-only mortgages, making it easier for them to pay off their lending than owner-occupiers.
And a prominent economist believes fixing that imbalance could be key to partially solving the housing crisis, at least on the demand side.
"We've got a fundamental problem here," economist Cameron Bagrie told The AM Show on Tuesday. "There's a mismatch here between the economic and the social side of the ledger, the gap between the so-called haves and have-nots.
"The haves tend to be the Baby Boomers, and they're the lot that tend to vote. It's little wonder the political dial is turned in favour of housing as opposed to knocking this thing on the head. We've got a shortage of supply."
But in recent months demand has also been hot, with interest rates at record lows and the market on fire - values increasing by double-digit percentages over the last year.
The Reserve Bank's main job is to keep inflation between 1 and 3 percent, but was recently told by Finance Minister Grant Robertson to consider its policies' effects on housing prices too, with ownership fast becoming an unattainable dream for many Kiwis.
Bagrie suspects bolder moves might be on the way.
"If we step back and have a look at the communication that's been coming out of the Reserve Bank - particularly the Reserve Bank Governor - over the past couple of weeks after he got that letter from the Minister of Finance, he stepped up the rhetoric, he stepped up the language... he's been out there talking a lot more about the speculative element across the property market, he's been talking about the need for households to diversify, he's been talking about people playing the leverage game - I think he's going to knock the leverage game on the head over the next two to three weeks.
"The overall message here is he's not going to stand idly by and let this thing continue."
In April last year, one in five housing loans were interest-only - that's almost doubled now to 39 percent.
"When we take on a mortgage we tend to pay the principal and the interest. The cash goes out the door - that sort of caps how much they can pay," said Bagrie, while investors often don't have to pay the principal - just covering the interest until they sell and reap the capital gains.
Robertson has asked the Reserve Bank for advice on whether restricting interest-only mortgages could help cool the market.
"If we change that dynamic so they've got to pay principal and interest, you are going to change the cashflow on residential investment literally overnight," said Bagrie. "They're not going to be able to chase the yields down as low, they're not going to force the valuations up."
It won't be a silver bullet, he warns.
"The Reserve Bank can curb demand, but the big issue is still supply. That's the ball back in the Government's court."
Home ownership rates have been dropping for 30 years, and are currently at their lowest since the early 1950s. The biggest drops since 1991 have been amongst young adults, Statistics NZ data shows - from 61 to 44 percent for those aged 25-29 and 79 to 59 percent for those in their late 30s. Rates have barely shifted for those in their 60s and above.
Robertson and Prime Minister Jacinda Ardern have both previously said they don't want to see house prices drop, while the Greens are the only party currently in Parliament that have explicitly called for them to come down.
