The Property Institute is slamming the Reserve Bank's move to increase property investors' deposits as "politically motivated".

LISTEN ABOVE: Stephen Bennie spoke to Andrew Dickens

The central bank is raising deposits for investors to 40 per cent across the country, not just in Auckland.

For owner-occupiers the 20 per cent required in Auckland, will be extended nationwide.

Property Institute chief executive Ashley Church says there were indications two weeks ago that the Reserve Bank would increase the loan-to-value ratio toward the end of the year, but have now been moved sooner to September.

"Changed in that space in time is that the Prime Minister gave the Reserve Bank a serve last week and told them to hurry up so that's a clear sign of political interference in what's effectively an independent reserve bank."

Church said this is again just "fiddling" by the Reserve Bank.

"There is a desperate need for a comprehensive range of measures to deal with issues around affordability for young people and the need to construct a large amount of properties very quickly."

ACT leader David Seymour said the restrictions show how dysfunctional housing supply has become.

"We should be changing the planning rules so that we can build more houses and give fiscal incentives to councils so that when they consent more houses, they get more money."

Stephen Bennie from Castle Point Funds told Andrew Dickens the bank can see there's problems for home-buyers.

"They've now acknowledged that this is becoming a country-wide crisis, and from here on those restrictions will apply nationwide, not just for Auckland."

New Zealand Property Investors' Federation executive officer Andrew King said the new conditions are going to negatively affect both investors and renters.

"I think investors are going to have a bit of a shock. It is going to make it harder for a lot of rental property owners to actually provide rental property for tenants."

King said this will push up rents.