Opinion: Everyone pays when politicians and planners can't work out what to do about the housing crisis.

Today, I'm a politician with an apology. Sorry about the Auckland housing market basket case.

Sorry you have to keep hearing about it (I realise this column adds to the problem). More importantly, sorry it's taxing you $2000 every year even if you live in Gore.



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I'm not exaggerating. Auckland's market costs us all by hiking mortgage rates for everybody.

Every three months the Reserve Bank Governor comes to Parliament and we interrogate him. Each time, Auckland housing comes up and he looks like somebody's cleaned out the Reserve Bank vault and he bears the bad news.

He's advised that Auckland's housing market is 40 per cent overvalued. A 'correction' from that height would be like wiping out the entire New Zealand Stock Exchange. Twice.

This week he confirmed that interest rates won't drop. (Again, he held them steady in April too.) There's no inflation and interest rates worldwide are at record lows. For every other reason he should cut rates. But then Aucklanders would borrow even more, sending house prices into outer orbit.

If mortgage rates were just one percentage point lower, the interest on a $200,000 mortgage that be $2000 a year lower. You would also probably see a lot more building and renovation work going on outside of Auckland. Meaning more jobs and more income generated.

Hopefully fellow Aucklanders will join in my apology because we are wholly responsible. Or, more specifically, Auckland politicians and planners are responsible.

If you had a dollar for every theory on Auckland house prices, you could almost buy one.

But one simple fact undercuts all others. Aucklanders built 50,000 houses in the 1990s. Over the last decade we built 40,000.

The population got much bigger, but we built fewer homes. After that it's simple economics. Demand grew. Supply shrunk. Prices exploded. Labour and National are both responsible.

Then came the blame. It was on foreigners, speculation, the lack of a capital gains tax. But speculation comes from shortage, or the justified belief there'll be one. Nobody speculates in Toyota Corollas because there seems to be an infinite supply of them. Unlike Auckland houses.

Meanwhile I've met a family in West Auckland who, along with their neighbours, own 50 hectares. It's enough for 500 homes but they're not allowed to build on it. They have services and there are no environmental problems except for a horse that would have to move.

The problem is they're on the wrong side of the Metropolitan Urban Limit – the council's line on the map past which thou shalt not build. Economist Arthur Grimes estimates the MUL makes residential land nine times more expensive.

It was a relief to hear Labour finally renounce the MUL. But it's taken years, and will their Green Party allies allow the city to grow? Another interesting thing is the family's daughter lives in a St Lukes leaky apartment. She'd like to build on her parents' land but she's not allowed. The family's situation pretty much sums up the Auckland housing market.

Generation after generation has built out and created new space to live. For no good reason the Auckland Council has decided it's time to stop the process, and it's hurting the whole country.

So, sorry for the trouble we've caused you. We promise we'll get our house in order. Just as soon as we find some political willpower.

Jacinda Ardern:

I agree David. Not only that, I agree vehemently.

The Reserve Bank this week had to make a trade-off between interest rates coming down, and the housing market in Auckland going bananas. They chose Auckland. It's indicative of how bad things have got, and that it's having a knock-on effect in other parts of the country.

But while we agree there's a problem, it's the solutions that we need to start getting in behind.

Yes, the urban growth boundary needs to go, but we need to replace it with a smarter approach to making room for growth. That means allowing more medium density in town centres and on transport routes, protecting areas of special value, and investment bonds to fund infrastructure that will make sure the ratepayer is not subsidising development in places where it is uneconomic.

But even that isn't enough. We need to build, and the scale of the building programme required will only be achieved if the Government steps up and instigates it. We have done it before, and we need to do it again.

And while that responds to our supply issues, we can also do something about demand. Nothing says to me that we have reached a tipping point than three of our major banks announcing that they will no longer lend to offshore buyers. The banks have done what our Government wouldn't.

While we are doing all these things, we also need a determined emergency response that puts a decent roof over the heads of the families who are living in cars and garages. And we need it now.

You call it a basket case, Steven Joyce calls it a "shortage in some areas." Let's call it what it is - a crisis- and deal with it that way. It's time to start rolling out solutions.That's the only way people will know that politicians are truly sorry.