UPDATED: 10.17am New measures to control house prices could lock first home buyers out of the market.

LISTEN ABOVE: Michael Reddell talks to Mike Hosking

The Reserve Bank wants to limit how much banks will lend, based on how much a person earns, as a way of controlling the housing market.

These limits are like those in the the UK, where most buyers can't get a mortgage higher than 4.5 times their annual earnings.

Labour's housing spokesperson Phil Twyford said there are better options available, but the Government refuses to use them.

"First home buyers should not be put in a position once again where they have to take a hit because of this Government's failed housing policy."

The party's finance spokesperson Grant Robertson also said he's concerned about the Reserve Bank's suggestion.

"That can prevent low-income people, first home buyers from getting in. We don't think first home buyers should be held responsible for the Government's failure to build enough affordable homes."

SEE MORE:

• English: First Home Buyers not the priority of The Reserve Bank
• Rachel Smalley: A debt-to-income ratio will hit first-time buyers the most

The Reserve Bank's holding off on introducing new housing-related policy measures, but the ASB Bank predicts it will further tighten loan to value restrictions in Auckland.

Chief economist Nick Tuffley said the housing data is likely to prompt the central bank to act in the next few months.

"Further figures from the Real Estate Institute, Auckland sales turnover continues to lift and price growth is picking up again."

Former Reserve Bank economist and economic blogger Michael Reddell told Mike Hosking it's a serious housing problem, not a banking problem.

"It's not one that he should be taking responsibility for and trying to solve. These issues are for central government and local government."

He said there needs to be a two-pronged approach to the housing issue with Government and councils working together.

"It's looking to rein in immigration somewhat at least in the short term and more fundamentally give us a market that functions."

Property Institute chief executive Ashley Church said debt to income ratios could also reduce incentives for building standalone homes, and lead to the proliferation of cheap apartments.

"If that was set at a level less than the current level of house prices in Auckland, which is about nine times income, then that would effectively kill the construction of new homes in their tracks."

Mr Church said the central bank is obligated to put inflation concerns ahead of home ownership worries.

But he said the measures would lock more people out of buying standalone homes, which would create fewer incentives for the building of new homes.

"These sorts of measures -- debt-to-income ratios, loan-to-value rations, other mechanisms and control mechanisms they've been describing -- are likely to exacerbate the demand issue we've got in Auckland."

Mr Tuffley said the Reserve Bank is still likely to cut the OCR to address low inflation.

"There is a risk that further OCR cuts do get dragged out a little bit further but we're still at this point expecting The Reserve Bank to cut the OCR again in June and then follow that up in August."

Mr Reddell said the population has been growing even faster in Atlanta than Auckland, but average house prices are US $180,000 and the average debt to income ratio is three.

He said the rate of home ownership in places like Switzerland and Germany is low but there are long-term, stable renting relationships.

"New Zealanders want to own their own homes and it's a reasonable legitimate aspiration. I think it's a big disruption to society as we've known it, and to society as New Zealanders value it."