The grand hope of home buyers and the Government alike is that the Unitary Plan notified last week will unleash a boom in housing development, swamp the market with supply and suppress prices.
Instead, it has unleashed a boom in ads encouraging buyers to scoop up the just-rezoned land and sit on it as land banks.
Here is this week's example of a 3.33 ha lifestyle block in Alfriston set to be rezoned Future Urban in the Unitary Plan: "Investors can enjoy rental income whilst land banking or your family can enjoy a relaxed country lifestyle whilst you land bank," the advertisement proclaimed, in a listing headed, "Land banking at its Best in Alfriston!"
"Urbanisation is closing in, get ready to tap into Auckland's growth," it concluded.
Another advertisement for an 818sq m section in Glendene pointed out the land had consent for two houses: "Make this Your Next Project with Land Banking Opportunity," it shouted.
On Wednesday Realestate.co.nz had 1062 listings for bare land, including sections and lifestyle blocks, using the phrase "land bank".
This frenzy is understandable. It's all about price expectations and holding costs. Auckland land prices increased eight-fold in the 18 years to 2014, making it the best choice in the history of New Zealand investment.
A block of land bought for $1million in 1996 would have produced $7m in tax-free profit over that period, while growing grass. There was no stamp duty for buying and few ongoing costs for holding it. Auckland's region-wide shift in 2013 from rating a property on land value to rating it on capital values has accidentally worsened the problem.
Ultimately, as Building and Housing Minister Nick Smith said this week, the only way to change the land-banking behaviour is to zone so much land for urban development that prices stop rising because of supply shock.
He points to the experience in Christchurch where a surge in housing and land supply during the rebuild has stopped prices rising so fast, and last year they fell a bit.
Auckland is different. Its population is rising at more than two per cent per annum from migration alone and we already have a shortage of 40,000 houses.
Which politicians will be brave and honest enough to propose taxes to stop land banking?
There is also plenty of capital surging into Auckland land prices from overseas that has also not been such a factor in Christchurch. Much of this money seems happy to sit around for a long period without earning much from rent or development, as if it really is a land bank rather than a generator of cash.
The chances of any sort of fall in prices Auckland, let alone a slowdown, seem much more remote, at least in the minds of potential land bankers. And their expectations are the crucial component in this latest frenzy of land banking.
The only way to truly change expectations is a price shock, and the only way to change holding costs is to apply a tax. A couple of options have been recommended to the Government at various points in the past eight years to deliver the price shock and increase holding costs.
The 2009-10 Tax Working Group that proposed a GST-hike-for-income-tax switch also proposed a land tax-for-income-tax switch. John Key rejected the land tax because the one per cent tax would have led to an immediate 17 per cent drop in land values.
Labour has promised to reconvene the Tax Working Group if it leads the Government next year, and would consider such a land tax as part of a wider review of taxing capital. The up-front price shock of a land tax and the ongoing holding costs should scare the living daylights out of land-bankers.
Another option is encouraging councils to levy targeted rates that capture the "value uplift" from zoning changes. This is essentially a tax on the capital gains created by a council redrawing the lines on a map. This was proposed last week by the Productivity Commission in its draft report on Better Urban Planning.
Council would include an extra rating charge for areas where the land values had risen sharply because of a public policy decision. It would kill two birds with one stone by encouraging housing development and paying for the infrastructure needed to underpin those new houses.
Both a centrally levied land tax and targeted rates for zoning or resource consent-related value uplifts would be more than enough to stop the land bankers in their tracks. They are conventional policies used widely and regularly overseas.
New Zealand has the lowest tax rates on land in the developed world so we should not be surprised that these investors abound in Auckland.
Which politicians will be brave and honest enough to propose either or both taxes?