New Zealand’s central bank, the Reserve Bank of New Zealand (RBNZ), is considering measures to directly target Auckland’s soaring house prices.

The Bank is reconsidering its position that a regional response to house price inflation wouldn’t work, deputy governor Geoff Bascand told local press, adding that Auckland prices “are going up from what’s already a very, very high level, so we are carefully considering whether action is appropriate.”

The RBNZ has already announced it is consulting on tighter lending rules for property investors.

Auckland house prices surged 16.7% in the year to March, according to Real Estate Institute data. The central bank had previously said measures designed to target a specific region were problematic.

“Previously we’ve indicated we think that’s quite difficult but perhaps there may be new ways of it getting a little bit more possible,” Bascand said.

The RBNZ last week indicated it may be prepared to cut interest rates later this year if near-zero headline inflation continues, however it is also concerned that lower borrowing costs will throw fuel on the Auckland housing market.

Economists at ANZ Bank New Zealand and First NZ Capital this week said they now expect rate cuts this year, arguing the RBNZ should focus on inflation and use prudential tools to target the overheated housing market.