New Zealand's politicians need to get the "guts" to introduce major reform aimed at tackling housing affordability, ACT Party leader David Seymour says.

Delivering his State of the Nation speech on Monday, he said ACT would boost housing supply by making it easier to build new homes and shortening approval times.

"We can't just tinker ... we need to act," he said.

"If ACT holds the balance of power after this year's election, we'll be ensuring that the government accepts the housing market is dysfunctional and reforms the fundamentals."

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He said if action was not taken to combat ballooning house prices, it could cost the country big.

A Demographia International Housing Affordability Survey ranked Auckland the fourth least affordable market of 92 cities in the world.

Aside from the threat of a bursting asset bubble, Mr Seymour said much of New Zealand's wealth rested on the fact elderly Kiwis had one of the highest home ownership rates in the world.

This allowed many to survive on lower incomes and welfare payments because they did not have to pay rent.

But with only 60 per cent of Kiwis now in their 40s owning their own home, "there will be a lot more people in trouble" when that generation retires, he said.

He said ballooning prices were caused by a lack of supply that was further exacerbated by a slowdown in construction.

He said while 38,000 new homes were approved for construction in Auckland in the the past decade, there had been 50,000 approvals in the 1990s at a time when the population was smaller and mortgage rates high.

To increase supply, Mr Seymour said ACT would create a new special planning legislation to oversee building approvals for homes within urban councils with greater than 100,000 people.

The Resource Management Act would be rewritten and councils would be able to get a portion of GST collected in the construction of new homes to act as an incentive for planning approval.

To further shorten the time it takes for approvals to be granted, he would also look to introduce a mandatory private insurance scheme instead of council building certification.

Mr Seymour said the will to deliver such fundamental reforms was lacking from the other major parties.