First home buyers are being told to lower their standards and look at apartments instead of quarter-acre sections as the Auckland housing market comes roaring back.
Mortgage advisor Bruce Patten said the quarter-acre section was becoming more unrealistic for first home buyers.
And an expert has called on the government to do more to boost housing supply, as the median house price in Auckland pushed to a record $820,000 this month, with national sales up more than 5 percent.
"First home buyers are going to have to start considering apartments as an option of getting into their first home.
"We need to build more of those at a cheaper price so that people can get their foot on the ladder," Mr Patten said.
New lending laws were passed last October to try to reel back the number of houses being bought as investments, but despite an initial slowdown in sales, things were right back where they started, he said.
"The changes have been effective in slowing it but certainly not stopping it - that means potentially there may be other restrictions if the market keeps driving at the level that it is now."
Mr Patten said banks could start restricting loans based on the incomes of those borrowing, but that was not a magic pill.
The bright-line bill meant property investors had to pay a 30 percent deposit on a loan, and a property tax if they sold a house within two years.
Hive News publisher Bernard Hickey said the number of houses being built was dwarfed by record immigration numbers.
"Upwards of 120 people a day are coming into Auckland and looking to buy or rent a house.
"That's on top of the 30 or 40 people a day who grow in Auckland because of natural population growth."
Mr Hickey said the current construction rate was producing less than half of the houses needed per year, and that desperately needed to change.
"Both the local government and the central government are going to have to look again at how they are going to accommodate that growth."
The political tensions around zoning rules in the unitary plan needed to be settled so the Auckland Council could finally start building upwards, he said.
Finance minister Bill English said the housing market bounce back, despite the lending restrictions, was not necessarily a bad thing.
"Well it's good to have the problem of a lot of demand.
"We've got high migration, a lot of Kiwis coming home, and economic opportunity in Auckland so it's good to see the demand."
Mr English said the government was doing all it could, and the primary responsibility lay with Auckland Council.
"We're very keen to see them understand and state clearly that they are going to accommodate as much supply as is required to eventually stabilise those prices."
Labour housing spokesperson Phil Twyford said the government was being disingenuous.
"The National government doesn't want to do anything meaningful.
"Their mates at the top end are making big money from the housing crisis."
He said a shortage of 40,000 houses still wasn't being addressed, and Auckland was under-building by 4000 to 5000 houses each year.
"The shortage of housing is getting worse, property speculation is getting rampant, and still the government refuses to roll up its sleeves and actually build houses."
Mr Twyford said a massive government intervention was needed to remedy the situation.