Finance Minister Bill English says the Government is looking at housing in much the same way previous administrations had focused on reform of other parts the economy, such as electricity.
English, in a speech to the Auckland Chamber of Commerce yesterday, said the Government spent $2 billion a year on accommodation subsidies, adding that about 60 per cent of rentals are Government subsidised and one in 16 Auckland houses are government-owned.
"Housing is our biggest asset class and our biggest market, with housing stock worth eight times the share market," English said.
The minister said there had been an inevitable amount of frustration around the speed of housing production but said this would speed up in the coming five years.
Lack of land supply, and hence higher prices, occur when the planning system isn't working properly. We want a planning system that recognises the consequences for all current and future residents, and for the country.
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"You are going to see supply continue to grow for the next four or five years," English said. "I don't know what effect that will have on prices, but that's what's in the pipeline now. We're getting the rules roughly right and in the next five years we'll see a lot happen."
English took the opportunity to say equality in New Zealand was relatively stable, contrary to most people's opinion.
"Can I first rebut the widespread assumption that the gap between the rich and the poor is getting bigger - in New Zealand it isn't," he said.
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"There are a whole range of ways you can measure these things, but it doesn't matter how you measure them, pretty much since the year 2000 there have been improvements."
Over the past 25 years, New Zealand had gone through extended reforms of the electricity, telecommunication and financial markets.
"In each case it took years to understand the impact of existing rules, and how to change them to achieve a more efficient market," he said. "Now we are addressing housing in the same way."
English said the Government was focused on rapidly rising house prices because they can have a significant effect on the macro-economy and financial stability. When house prices skyrocket, government housing services and subsidies become more expensive.
"Lack of land supply, and hence higher prices, occur when the planning system isn't working properly."
English said Government development projects were expected to deliver at least 10,000 houses by 2020, including the Hobsonville Point and Tamaki developments.
Commenting on the economic outlook, English said there were positive signs despite international turbulence. Treasury forecasts economic growth over 2016 and 2017 will average over 3 per cent, better than most comparable countries.
At the same time, central banks around the world were grappling with very low inflation.
Some farmers are doing it tough, but we do have to keep this in perspective. Dairy exports make up five per cent of the economy, and the industry has a positive view about its long-term prospects.
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"There is a lot of uncertainty about exactly what is keeping inflation so low, and the implications for our economies," English said.
Markets were reflecting anxiety that economies with zero or negative interest rates can't rely on central bank interventions.
On that score, New Zealand was in a better position than most because the Reserve Bank - which has kept its official cash rate at 2.5 per cent - still had room to move if needed.