A former Reserve Bank economist says land rules should be reformed, to dampen the hot housing market.

The Reserve Bank is mulling over bringing back LVRs for higher deposits, with prices expected to rise by up to 12 percent by next June.

Former Reserve Bank economist Michael Reddell says the Reserve Bank should only intervene when banks are lending irresponsibly.

He told Mike Hosking that currently isn't the case.

"The issue with the housing market is the Government is underpinning land values with its land use restrictions through the RMA and local governments."

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