The government's housing policy aims to skew the market in favour of first home buyers, who are currently locked out of the market by rapid price gains in recent years, says Housing Minister Nick Smith.

Speaking to Parliament's social services select committee, Smith said initiatives to increase supply such as special housing zones and support including KiwiSaver's home start subsidies were part of the package designed to favour first-home buyers largely ignored by private developers chasing more profitable returns from expensive sections of land.

I'm "wanting government policy to skew the market in favour of the first home buyer - so what are the things we can do at government level to ensure more of the homes end up in the hands of young families aspiring to own their own homes," he said.

Reserve Bank data shows mortgage lending for first-home buyers has increased to 12 per cent of all lending in April, rising 41 per cent to $789 million from the same month a year earlier, when first-home buyers accounted for 9.9 per cent of total lending, and up 140 per cent from April 2014 when the proportion was 9.7 per cent of all lending.


The goal was one of Smith's four priorities as housing minister, along with increasing housing supply, especially in Auckland, encouraging new builds of affordable housing, and continuing work to improve the health and safety of the nation's housing stock.

"It's interesting to note the highest proportion of new homes across New Zealand was in Auckland," Smith said.

"That's encouraging, that shows we are actually influencing the market and getting the building sector more focused on producing more product in that affordable range."

First-home buyers still aren't likely to buy new houses, even if they are affordable, and speaking to reporters after the hearing, Smith couldn't say what the shortfall of affordable housing in Auckland was because the "definition of affordable is in the eye of the beholder."

He expects new affordable builds will have an effect on sale prices of existing houses, but didn't expect that to lower prices for first-home buyers.

"I do expect the new houses coming on stream to have a greater proportion in the affordable range," Smith said. "My ambition to get house price inflation in markets like Auckland down to single digits."

It's interesting to note the highest proportion of new homes across New Zealand was in Auckland.

Quotable Value figures earlier this month showed Auckland property values rose at a 15 per cent annual pace in May, slowing from a 17 per cent pace in April. Annual building consents in the country's biggest city were running at 9,353 in April, less than the 13,000 needed to keep up with an expanding population.

Earlier in the day, Social Housing Minister Paula Bennett told politicians rents had increased 6 per cent and that was adding to the cost of rental subsidies for people on low incomes and that one of her priorities was in addressing the shortfall in emergency accommodation, which got a $200 million funding boost in last month's budget.