By Bernard Hickey

Prime Minister John Key has denied there is a housing crisis in Auckland and has said the Government is "getting on top of the problem,| despite his own officials saying the measures taken by the Government are not solving a housing shortage of over 20,000 homes in New Zealand's biggest city.

Key's comments in Parliament came after Labour Leader Andrew Little pointed to advice to ministers by MBIE officials in late November saying that the Government's special housing areas and RMA reforms were unlikely to reduce the housing shortage in Auckland and the Government itself should look to kick-start major house building programmes. David Hargreaves first highlighted the official advice on March 9.

Little started his questions by pointing to MBIE's comments that cost savings on building materials from tariff reforms would be captured by developers.

Key said he had not read the MBIE advice, but that in any competitive world cost savings would be passed on to consumers and that MBIE stood by its estimate of NZ$3,500 in savings per home.

Little then asked: "Has he perhaps been advised of another passage in the report, which states that the price impact of the Government’s special housing projects is “negligible”, and why does he insist on using piffling half-measures against a full-blown housing crisis?"

Key said there was not a housing crisis.

"There is certainly a demand for houses, and that in part reflects the fact that the Government is doing such a good job that New Zealanders are no longer leaving for Australia in droves like they did when Helen Clark was the Prime Minister," he said.

Key said the problems of rising house prices were worse under the Labour Government led by Helen Clark from 1999 to 2008.

"This Government has set about solving those issues. Interest rates are lower, a hundred special housing areas have been established, and house construction is taking place at levels that are now back where they were in 2008. We are getting on top of the problem," he said.

Little then asked about MBIE's suggestions for large scale house building kick-started by the Government on Crown land (although it was not clear from the report how involved the Government would be in funding or building the houses, or how closely it was aligned to Labour's KiwiBuild programme).

"Now that his own officials are recommending he adopt KiwiBuild, will he drop his ideological blinkers and get on with actually building affordable homes, or is he putting politics before families yet again?," Little asked.

In reply, Key said: "No, we will not be adopting Labour’s failed policies. I predict over the course of the next 6 to 12 months—Mr Parker knows what is coming; he is quiet as a little church mouse these days—most of the policies that Labour did announce will be gone by lunchtime, morning tea time, and anything else."

'Nail in the coffin'

Later, Little said the MBIE advice showed Key was out of touch.

"The Government is so removed from what’s happening in the real world that John Key had a straight face when he told Parliament today there was no housing crisis," Little said in a statement.

"It proves the Government’s tinkering is doing nothing to solve New Zealand’s urgent need for housing and that the solutions proposed by Labour will work," he said.

Auckland house values have risen 43.8% since the 2007, QV has reported. The REINZ median price for Auckland has risen 59% in the first six years since National's election in November 2008, while Auckland house prices rose 56% in the six years to 2005.