Former British policitician and Waikato University vice chancellor Bryan Gould says the housing bubble is about to burst.

New Zealand's housing bubble is about to burst, former British politician and former Waikato University vice chancellor Bryan Gould says.

"This is not a normal market. We need to stabilise house prices or else it will burst. That's going to happen sooner rather than later."

Furthermore, he said Reserve Bank Governor Graeme Wheeler was being weak by not making the banks rein in their lending habits.

Yes, land needs to be released for building, but that wasn't the only key to solving the housing problem, Gould said.

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​Gould spoke to an audience on Thursday of about 100 people at Hamilton's St Peter's Cathedral.

Wheeler was a smart man and knew what needed to be done, Gould said.

The banks would attack Wheeler if he created policy limiting their ability to lend, as it would hurt profits, he said.

However, banks that continued to lend up to nine times people's salaries were contributing to the steep house prices and housing unaffordability.

"If banks gave all of us half a million to spend on cars, that would drive up the price of cars. But it's houses they are lending on.

"History tells us sooner or later the bubble will deflate. And these bubbles don't deflate slowly."

The Reserve Bank declined to comment.

Gould took aim at more than banks in his speech, however.

He said the only way to sort out most problems was to address the root cause - in this case, supply. So part of the answer was to put a glut of affordable houses on the market.

Both the number and the type of houses being built were not addressing the problem.

Those houses were for the higher end of the market, he said.

He called for people to take organised action to create changes.

"We live in a country where everyone should have access to housing. But they don't. Something is going wrong."

This conundrum had happened in effect because the Rogernomics of Roger Douglas under Prime Minister David Lange brought inequality to New Zealand, Gould said.

He added that he came to New Zealand during the Lange era and heard Douglas and his cohorts espouse these radical economic theories.

"Their eyes were blazing with the zeal of religious converts.

"But it had failed in Britain."

He described it as a free-market philosophy where people would grab what they could.

Class segregation and the extreme wealth and poverty were nonexistent in New Zealand until then, he said.

"That sort of inequality was only known in the likes of Britain.

"These conditions have now become endemic in New Zealand."

The 77-year-old said it was the prerogative of the older generation to say things weren't what they used to be.

In some ways, things had improved, he said. But in terms of housing, it hasn't.

Gould grew up in a state house in the Taranaki town of Hawera, but had no concept of having less or more than others.

"We had no sense we were better or worse than anyone else." Therefore, Gould said, he and his siblings had no barriers when going into the world.

His brother, Wayne, was famous for spreading Sudoku puzzles through the West and was named by Time magazine in 2006 as one of the world's most influential people.

"We lived in a community that was safer, kinder, gentler than it is today.

"We were important members of that community."

Neighbours have stopped looking out for one another, he said.

When he was younger, if someone was doing it tough, the neighbour was there to help out, he said.

"Although we know more about what is going on, we have less connection and desire to do anything about it."

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