Key Points:

The results of a study into housing affordability released this week will come as no surprise to those wishing to get a foot - or even a toe - on the home-ownership ladder. The study, by, an online "market intelligence service", found that housing affordability has declined dramatically in the past year. A year ago it took around 82 per cent of the average take-home pay to afford the median Auckland house; now it is 92 per cent.

Those numbers overstate the situation, since many homes are not single-income and many homebuyers seek houses below the median price. But it is undeniable that it's getting harder and harder to put a roof you (and a bank) own over your head. Home ownership has dropped almost 10 per cent since 1990 - and that was the first decade since the 1940s in which it did not rise. This is a modern malaise and it is getting worse at such a steady rate that the word "crisis" no longer seems to overstate it.

The idea of owning your own home has long been stitched into the fabric of national identity. This was a country that Austin Mitchell, a resident Englishman who wrote a book about us in 1972, described as a "quarter-acre paradise". Low-interest first-mortgage finance from state agencies, including funds specifically earmarked for returned servicemen, and schemes by which 17 years of family-benefit entitlements could be capitalised into lump sums for first-home buyers - these were tangible signs of our collective belief that home ownership, for those prepared to stay in steady and productive employment, was a right, not a privilege.

Now, in the space of a single generation, that has all been swept away. Rates of home ownership have marched remorselessly downward: in the last year for which figures are available, they were down 12 per cent nationwide - twice that in Auckland and for 25-39-year-olds - in a single year.

The quarter-acre dream is not universal, of course, and the traditional nuclear family is only one of many domestic arrangements. But enough people want to own their own homes and cannot to make this a crisis that needs addressing.

The Government has stood aloof from matters, leaving Reserve Bank Governor Alan Bollard to ratchet up the official cash rate in the hope that higher mortgage interest rates would cool the super-heated property market. Even he admits that that has been ineffective. But he is not alone in asserting that the heart of the matter is the Kiwi love for investment in residential real estate. The national passion for buying houses has helped drive the price boom. The investors who benefit from rising capital values are helping, more than any other single factor, to fuel them. In the process, they are diverting money away from investment that would stimulate production and create jobs.

So popular has investment in housing now become that any government that moved to discourage it would risk electoral massacre. A suggestion by Massey University Professor Bob Hargreaves that the Government sell some housing stock and use the money to build houses to help first-home buyers, has merit. But it is past time for a more radical policy shift. If the major parties all committed to the abolition of the tax deductions that make residential real estate such an attractive investment, it would send a serious signal to the investors that they are creating a New Zealand we don't want.

Economists are fond of saying that intervention in the market can have "unintended negative consequences". But it seems hard to imagine a consequence more negative and more unintended than making home ownership a luxury to which future generations can never aspire.