A week ago, when the Budget had delivered no answers to the hyperinflation of house prices, the Prime Minister told us to wait for an imminent National Policy Statement.

It would direct councils to make more land available until house prices stabilised. The statement duly came yesterday from Housing Minister Nick Smith. It has not lived up to its initial promise. It requires councils to monitor land value, building consents and housing affordability in their jurisdiction, co-ordinate infrastructure with consents and recognise the national significance of ensuring enough land is available for housing. Five councils, including Auckland, will have to set a house building target. The Auckland Council can breath again, it is business as usual.

Even if the policy statement had matched its billing, it would not have been a solution to housing's ever worsening unaffordability for most first home seekers. But it would have shown the Government was seriously intent on doing something about it, since the Government believes it is all a matter of supply. Now we have to wonder again, whether the Government regards the rate of house price inflation as a problem.

This week we learned the average price in Auckland is on course to reach $1 million this time next year and the bubble is no longer confined to Auckland and cities nearby.


The national average is now rising faster than Auckland's, according to Quotable Value NZ. This is good news for home owners, making them wealthier on paper and encouraging them to borrow against their property at today's very low interest rates and become landlords to the young and poor, or speculators with houses that sit empty between frequent sales.

Clearly National is not detecting enough concern in its private polling to prompt it to do more. Most people could suggest one very effective measure - shutting the door on immigration for a year or two - but the Government is right not to resort to that. The population is catching up on 25 years of stagnation to the turn of the century. It is reaping the benefits of economic reform in that period and has become more attractive than economies still struggling to recover from the global crisis.

The housing boom is now as long-running as the surge of immigration since 2013 and it's tempting to see no end to it. But the bigger developed economies will recover, their near zero, even negative, interest rates cannot last.

The inflation this monetary stimulant would normally cause has everywhere occurred in housing and other asset prices rather than consumer prices, but at some point general inflation will pick up. Then interest rates will start to rise and house prices will respond. They might slow to a normal rate of increase, or fall.

The newly mortgaged, and the multi-mortgaged, must hope they do not fall.

They, and the present Government, are riding their luck. They may be banking on their ability to read the market and sell at the right time. They might be banking on the Government's reading of the market and taking heart from its lack of action. They may be riding for a fall.