Auckland Council will be required by law to open up enough land to build houses for its rapidly-increasing population under a new policy released by the Government this afternoon.
Housing Minister Nick Smith said a new national policy statement (NPS) sent a "very clear directive" to urban councils that they had to provide sufficient capacity for new housing and businesses in line with projected growth.
"If they are not matching up in terms of their plans, they will be required by law to change them," Dr Smith said.
All councils would be affected by the new policy, but it would have the greatest impact on 27 growing councils, in particular Auckland.
The statement did not specify where councils needed to open up land - only that sufficient capacity had to be created to match long-term demand.
On top of freeing up land for housing, the statement required councils to:
• Monitor and respond to housing affordability, building consent and land value data
• Co-ordinate infrastructure and ensure consent processes are "customer focused"
• Recognise the national significance of ensuring enough land is available for housing With predicted population of 18 per cent, Auckland was classified as a "high growth" region in the NPS.
This meant it would have to set a minimum target for building houses in the long-term.
Four other councils - Tauranga, Hamilton, Queenstown and Christchurch also fell into this category.
Having earlier threatened to step in if councils did not agree to free up enough land, Dr Smith softened his stance today.
"We are not telling councils to build up or out", he said, but simply to provide enough land to match population growth.
Dr Smith said there was no "magic bullet" to solve housing affordability problems, but land use was the key driver behind rising house prices.
High section prices were a "huge, compounding problem" because no one would build an affordable home on a $450,000 section, he said.
The NPS did not include any support for councils to provide infrastructure for new houses. Dr Smith said that the main costs of infrastructure would still rest with developers.
Response to the policy statement from National's support partners was generally supportive.
Act Party leader David Seymour said it was a good first step towards broader reform of planning rules.
"While others have attacked foreigners and proposed new taxes and red tape, Act has always said that housing affordability is fundamentally a land supply issue," he said.
United Future leader Peter Dunne said the Government was finally "cutting to the chase" of housing affordability issues.
But he said broader reforms of the Resource Management Act should now be abandoned, because the NPS had made them redundant.
"Affordable housing provision has been the Government's priority since it began talking about changes to the Resource Management Act over three years ago," he said.
"In the meantime, the Bill currently before the House goes way beyond the housing issue, traversing completely separate issues like water management and wider regional planning."
Labour Party housing spokesman Phil Twyford said the policy was a "damp squib" which was unlikely to make any different to Auckland's housing crisis.
The NPS failed two crucial tests, he said. It did not give guidance on how infrastructure would be financed. And it said nothing about abolishing Auckland's urban limits - a move which had been signalled by National and was supported by Labour.
Instead, Mr Twyford said, it set up a "bureaucratic system" for assessing housing demand.
"Where's the promised game-changer?" he said.