The Reserve Bank expects sales volume to drop by about 5% due to the loan-to-value speed limit restrictions it introduced this month.
Banks must keep their low-LVR lending to less than 10% of their new loans.
In an analytical note published today, the bank said it expected a drop in turnover and for house price inflation to drop by about four percentage points from where it otherwise would have been in the first year.
If the limits created a behavioural change among buyers and sellers, the impact could be more significant.
To achieve the same result through monetary policy alone, it would have to hike the official cash rate by more than 30 basis points, it said.
The bank has estimated that 90-day bank bill yields will be 30 basis points lower because of the restrictions, because of the reduction in general inflation pressure.
It also said that if the limits were applied for two years before a major fall in house prices, it was likely that the banks’ losses on their housing portfolios would be at least 10% or 15% lower than they otherwise would have been.
A key focus of the change was the stability of the financial sector.