The Government will release new rules for councils to open up more land for housing tomorrow.

The national policy statement (NPS) on urban growth, which was signalled in the Budget, will be released by Housing Minister Nick Smith at Parliament.

The statement -- which is mostly targeted at Auckland -- will direct councils to rezone land for residential development if they pass specific thresholds in population growth or housing affordability.

Last week, the Government talked tough on the issue, saying that restrictive planning rules were the biggest obstacle to increasing housing supply. If councils did not free up land, the Government would force them to, Prime Minister John Key said.


"It is no longer a matter of choice or debate for those councils," Mr Key said during the Budget debate.

"Land will be zoned residential and developed in quantities sufficient to meet demand, period."

Today, Mr Key was more understated. He downplayed the potential impact of the NPS.

"I don't think any one particular thing - from a national policy statement to a bright line test of itself will be the silver bullet, but I think, overall, the combination of them will."

Housing Minister Nick Smith said property prices were still rising too quickly. Quotable Value figures released today showed that the average value of a home in Auckland was now nearly $1 million.

On the problem of speculators and land bankers, Dr Smith said one of the best responses was to bring land value increases under control by addressing supply issues.

"We need to get house price increases back into single digits."

Labour Party housing spokesman Phil Twyford said for the NPS to be effective, the Government needed to find a way to pay for the infrastructure that new housing developments would require. He estimated that the $17 billion in new infrastructure was needed to cover the cost of Auckland's growth.

Auckland Council opposes changes to its urban boundary. It says that developments with capacity for 23,000 homes have been approved outside of its urban limits.