The tide may have turned against housing being a one-way bet for a generation of New Zealanders, the Reserve Bank says.

It comes as house prices remain high despite recent falls, increasing the wealth gap between homeowners and those who do not own a house, the latter often being younger people.

In a speech at the national property conference this week, the central bank's chief economist, Paul Conway, says those who do not own houses have seen accommodation costs increase, with prospective younger first-home buyers struggling to buy a home.

"For several decades, we have traded houses among ourselves at ever-increasing prices in the belief that we were creating prosperity."

However, in the long term, factors that determined house prices could be changing, says Conway.

"On the demand side, as the pandemic slowly recedes and international travel restrictions unwind, many New Zealanders are heading overseas seeking new experiences. On the other hand, immigration is unlikely to return quickly to pre-pandemic levels, contributing to slower population growth overall."

In the tax space, removal of interest deductibility and the introduction of a capital gains tax on sales of residential property owned for less than 10 years (bright line test) would close some of the gap between the effective tax rate on housing and other asset classes, says Conway.

"At the same time, urban planning rules are being freed up to unlock more housing supply. The Resource Management Act is being replaced and the National Policy Statement on Urban Development directs councils to remove overly-restrictive planning rules and to enable higher housing density, which is a critical part of the solution.

"These changes are consistent with more houses being built and currently high building consents translating into more actual houses. They also imply that housing market dynamics in future are unlikely to be the same as in the past."

In his speech, Conway reiterated a number of factors that contributed to the recent upward pressure on house prices.

The housing stock had not kept up with population growth and the country was also in a low interest rate environment and had tax settings that favoured housing, he says.

At the same time, land supply was constrained by changes to urban planning policies in recent decades.

Building costs are also 16 per cent higher in New Zealand than Australia, making house building an expensive process, Conway says.

The Commerce Commission is carrying out a market study into whether competition for residential building supplies in New Zealand is working well or not.

-RNZ.