Auckland's housing market seems possessed by some sort of wondrous and evil magic. It just keeps on going up and nothing and no one seems able to stop it.
Graeme Wheeler and Bill English must feel at times as if it is some sort of untameable dragon scorching the earth of large parts of the economy and the Government's finance.
Wheeler murmured again this week about how Auckland's housing market was an influence on his thinking on interest rates, a change from comments over the past year.
The Government has also tried regularly over the past three years to dampen the fire, introducing Special Housing Areas to nudge along new housing supply, imposing the new two-year "bright line" test to toughen up existing capital gains tax on speculators and forcing non-residents to say who they are when buying. All to no avail, it appears.
Auckland's median house price has risen 83 per cent since February 2009 and another 2.5 per cent in September alone. It rose 35 per cent after the Reserve Bank put up interest rates and restricted high loan to value ratio lending and after the introduction of Special Housing Areas. The median also rose 7 per cent after the May announcements of new LVR restrictions and the bright line test.
All these assurances from economic policy makers could be the basis of a Tui advert: "Yeah, Right".
Auckland housing is clearly still out of control and will be for decades to come if the noises coming out of Auckland's planning process are anything to go by.
Auckland's population is expected to grow by another one million by 2040. That would require another 400,000 houses over the next 25 years, yet the Auckland Council's new Unitary Plan would allow for 183,000 houses built at the most.
Planning rules include apartment sizes, balconies, building heights, building densities, required carparks and "view shafts" that fan out from Auckland's volcanic cones.
The latter make it impossible to build the tall residential towers needed for the coming million.
Towers along ridges would avoid blocking sea views and would connect with the road, bus and rail routes already in place. They are currently impossible from a regulatory and political view. But they are what is needed.
So what if nothing changed in our city planning, tax and migration?
House-price inflation averaged more than 7 per cent a year in Auckland for the past decade and average wage growth has averaged just over 2 per cent. That doubled the house-price-to-income multiple in Auckland to 10. If those growth rates continued through to 2040, Auckland's median house price would be $3.4 million and the price to income multiple more than 23.
To service the debt on that sort of house price, a household would have to spend 110 per cent of its income on interest payments. Or interest rates would have to be 2 per cent.
What's needed is blue-sky thinking about Auckland housing, including co-ordination around migration and planning rules.
Yet where is the political will to slay the dragon?
Until we see a mayor or a cabinet minister propose a lower permanent resident target or the removal of those view shafts we can expect many more patches of economic scorched earth, including unnecessary interest rate hikes like last year's, and the Government spending $2 billion a year subsidising 60 per cent of rental housing, as it does now.