Auckland house prices could suffer a sharp fall if funding markets were disrupted or economic conditions weakened, Standard & Poor's (S&P) says.

The global ratings agency downgraded the stand-alone credit profiles of New Zealand's four biggest banks on Friday.

The cuts were made on the basis that New Zealand's economic imbalances had heightened risks, especially in the Auckland housing market.

S&P director of financial services ratings Nico De Lange said that while a crash was unlikely, it would affect most financial institutions in the country.

"The sharp correction could be caused by a number of factors.

"A potential disruption in funding markets, [or] it could be caused by a weakening of macroeconomic factors."

The last significant correction to house prices was triggered by the global financial crisis, with bank funding squeezed and the economy in recession.

S&P cut ANZ, BNZ and Westpac's stand-alone A- rating to a BBB+ rating, while ASB's rating was cut from A to A-.

The ratings do not take into account the support of the banks' Australian parent companies.

On an overall basis, the big four local banks' issuer ratings were unchanged at AA-, with a stable outlook.

De Lange said the ratings agency was "more or less on the same page" as the Reserve Bank, which has attempted to rein in the housing market with various restrictions.

He said those measures were definitely helping, but only "to a limited extent."

"Whether it's doing enough, that's probably more of a question."

S&P said low interest rates, housing supply constraints and high net immigration had all contributed to price appreciation.

Several credit unions and smaller finance companies also had their ratings taken down a notch.

State-owned Kiwibank, which has implicit backing from the Government, escaped the downgrade.