We're going to have to build up, we're going to have to build out and we are going to have to start thinking more radically about how we change the housing dynamic in Auckland.

The affordability issue can no longer be ring-fenced as a problem only for a younger generation with unrealistic expectations.

If we continue to exclude a generation of Aucklanders from home ownership then we are creating problems that will ripple right through our economy. The most obvious is the inequality gap that soaring house prices is creating.

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The current state of the economy - most Western economies in fact - is one of low inflation, low growth and low interest rates.

In this country the glaring exception to this trend is house prices. It makes for a pretty good scenario if you already have a house. But if you are trying to get in to the market it is a disaster.

If middle-income earners can't afford to live in the city then it is going to face a constrained labour supply and the costs of living in Auckland will rise further still.

This is only sustainable while immigration remains strong.

Should that trend reverse, Auckland's economy may find itself dangerously exposed.

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