New ANZ report

PHOTO: ANZ will now require a 40 per cent deposit from investors borrowing money to buy residential property. Source: 1 NEWS

ANZ Bank is calling for big, bold and urgent action to douse an overheated and unsustainable housing market.

In its latest monthly report on the property market, the bank warned house prices could be due for a correction in the new year if they continued to rise at the current rate.

“Continued monthly house price rises of 3 percent in the context of zero income growth just doesn’t add up,” the report says.

“We have pencilled in a wobble in the market next year as affordability and credit constraints are felt, loan-to-value restrictions bite, and a softer economy (including weak migration and income strains) becomes evident.”

The Reserve Bank had fielded the brunt of the criticism for fanning the flames in the housing market, with the injection of cheap credit into the economy and by lifting loan to value restrictions on banks.