"They've already got the dials, they just need to twist them a bit," he said.
Currently, most Auckland investors require a deposit of 30 per cent, and just 5 per cent of a bank's lending in this category can be made at lower levels than this.
Most other Auckland borrowers are required to have a deposit of 20 per cent under the LVR rules, although 10 per cent of a bank's lending can be at lower levels.
Both the required deposit level and the extent of lending allowed outside the restrictions could be adjusted, Mr Stephens said.
LVR restrictions for all borrowers were initially introduced nationwide in 2013 but were eased outside Auckland last November.
March data has shown both Auckland and a number of regions are experiencing a renewed house-price boom.
Another, more radical option, which is available under existing legislation, is to require the banks to hold more capital and restrict their ability to lend on property. Independent economist Shamubeel Eaqub argues this would be more effective than tinkering with the LVRs.
"Now that we are limiting investors in Auckland, they are going elsewhere," he said. "We are chasing the problem around rather than clamping down on the fundamental issue: the banking sector lending great amounts of money for property."
Capital requirements which made mortgage lending less risky than lending for business needed to be re-weighted, he said.
"These guys are pumping out huge amounts of risk and we know that because they are too big to fail, they will be guaranteed by the taxpayers."
A third option was to come up with new tools, such as debt-to-income ratios - restricting the amount house hunters can borrow according to how much they earn.
The Reserve Bank's next opportunity to address the issue comes on May 11 when it releases its latest financial stability report.
Meanwhile, an Auckland community housing leader has warned rents could jump by 20 per cent or more once the heat comes out of the "pressure cooker" Auckland market.
CORT Community Housing chief Peter Jeffries said yields (net rents as a proportion of house prices) had dropped from a traditional return of 4-5 per cent to only 2.6 per cent.
Most landlords were still more than covering their mortgage costs and making profits through capital gains, which had climbed to almost 15 per cent. "However, if capital gains start to flatten then rents will be expected to cover all the costs of operating a property," he writes in an opinion piece published in the Herald today.
"If rental yields return to what they were, Auckland's average rents will increase by around $183 a week, or an extra $9516 a year.
"For people who cannot afford the new rents, the main alternatives are finding cheaper housing further away or possibly outside of the city, accepting less suitable or poorer quality housing, suffering increasing in overcrowding and homelessness."
It was likely that many landlords would not raise their rents this much because of tenant objections. But this would only restrict the supply of desperately needed new housing, as landlords would be unwilling to take on more properties at a possible loss.
Property Investors Federation executive officer Andrew King said rents were far less volatile than house prices and were likely to adjust more gradually to any market changes.
Tax on vacant properties touted
A group in Melbourne are proposing owners who leave their homes empty for more than 12 months face a tax.
Charity group Launch Housing says people who leave homes vacant are worsening the housing crisis in the Australian city and should pay for the social harm it causes.
However, the New Zealand Property Institute says there's no place for a vacancy tax here.
Chief executive Ashley Church said he understood the motivation behind the idea, especially when many houses were sitting empty in Auckland.
"The solution to that problem is to improve the supply of houses as quickly as possible ...
"Not to try to penalise people who ... are utilising that stock, as they choose to, within their free society rights. Where would you stop? Do you tax people who don't use their cars on certain days?"
- NewstalkZB
