(Adds details)

WELLINGTON, June 16 (Reuters) - New Zealand's Central Bank said on Wednesday it was adding debt serviceability restrictions to its policy toolkit to support house price sustainability, as the country's property market continued to be among the most unaffordable in the world.

In an effort to cool a red-hot housing market, the government asked the Reserve Bank of New Zealand (RBNZ) earlier this year to have regard for house prices while making financial stability decisions, and also slapped property speculators with new taxes.

Home prices, however, have continued to increase, soaring more than 32% year-on-year in May.

RBNZ said the bank and the minister of finance had agreed to update their shared Memorandum of Understanding (MoU) on macro-prudential policy and add debt serviceability restrictions to the list of potential tools available.

The agreement was on the condition that any implementation is designed to avoid impact, as much as possible, to first home buyers, RBNZ said in the statement.

“Although we do not have a remit to target house prices directly, our financial policy tools can help to ensure prices do not deviate too far from sustainable levels,” Reserve Bank Governor Adrian Orr said.

New Zealand's success in combating the coronavirus and an acute shortage in affordable housing has fuelled an already hot property market, pushing up house prices to even more unaffordable levels in the last 12 months.

RBNZ said its analysis found that debt serviceability restrictions, such as a Debt-to-Income (DTI) limit, were the most effective additional tool that could be deployed to support house price sustainability.

Such restrictions would impact investors most powerfully while having limited impact on first home buyers, it said. (Reporting by Praveen Menon; Editing by Leslie Adler)