Paying state tenants to leave Auckland is first sign Govt is thinking outside the square.

Late last year Finance Minister Bill English acknowledged that Auckland's runaway property prices posed a risk to the New Zealand economy. In similar markets, he cautioned, spiralling house prices had steadied before collapsing. For thousands of homeowners and investors, freefalling real estate prices would be a disaster. Property values would be wiped out, leaving mortgage holders servicing loans worth a lot more than their asset. That would endanger not just the economy, but also the Government's political wellbeing.

For younger generations, the chasm between property prices in Auckland and incomes has become so wide as to seem unbridgeable. By one estimate the gap, at 10 to one, is the largest on the planet, meaning the prospect for many of home ownership in the city where they live and work is out of reach. This breach has opened rapidly. Should it remain it could entrench the division between those fortunate enough to have a foot on Auckland's property ladder and those who sense they will pay rent for the rest of their lives.

So it is hardly a surprise that Mr English has identified the Super City's property market as a significant economic and political issue.

This week came the first sign that the Government is thinking outside the square, with Social Housing Minister Paula Bennett floating the idea of paying cash to help poor families find empty state houses outside Auckland. There was a hint of stick in the announcement, with the suggestion that tenants who stuck with the Auckland waiting list would find themselves waiting longer for a home. Ms Bennett indicated that the idea could appeal to Pacific Island families, though it would be unfair if any family got pushed down the waiting list for refusing to shift to a region where they might struggle to find work or social connections. This measure would have limited impact on the Auckland property market, but is a response to one part of the housing challenge, given that low-income families face overcrowding and related social ills.


The real challenge is getting more houses built.

Foreign investors could be encouraged to buy non-urban land provided they quickly created new housing.


Pressure to close the house price-to-income ratio, thereby putting homes within reach of more residents - say by halving the existing gap - requires measures which reduce the costs of supplying housing and make more housing available. Given the pedestrian progress made towards this goal over the past few years, it may seem beyond the skill of policymakers in Wellington and city hall.

This should not be the case, but the two need to work from the same page. There is a pressing need to make more land available for housing. This will require Auckland Council to look hard at its property portfolio and could involve measures which challenge landbankers. The role of private investors in the provision of infrastructure - usually the domain of the public sector - should be explored and the push to intensification - often in the face of local resistance - maintained. Foreign investors could be encouraged to buy non-urban land provided they quickly created new housing.

Taking a leaf from Ms Bennett's script, there may be value in trialling what have been called Special Economic Zones in the Super City. The idea, floated by the New Zealand Initiative, a Wellington think tank, could see the Resource Management Act relaxed in parts of Auckland with the support of local boards. In these places, restrictions on small dwellings could be eased so they go up faster.

These measures should not scare the horses. They should go in hand with steps which reduce New Zealand's relatively high construction costs. Together they are modest steps which might help get affordable house building cracking.