A two-pronged attack is being formulated to fix the country's housing shortage.
The Reserve Bank has hinted at restrictions on bank loans for house hunters so the amount you can borrow will be more strictly tied to your income. That will hurt first-home buyers.
The second prong is to make councils free up more land, and to do that the Government is prepared to elevate the housing issue to a "matter of national significance".
Auckland housing's problems are Economics 101 -- lack of supply and too much demand.
Building and Housing Minister Nick Smith calls the move a "game changer". Dr Smith will use the Resource Management Act to make housing supply "a matter of national significance". It's a directive -- an order to councils to free up land and free it up fast.
Auckland is believed to be anywhere between 20,000 and 76,000 houses short. It needs 13,000 new houses a year, but last year there were only 9700 consents.
Councils, especially Auckland, are accused of being too slow and standing in the way.
Dr Smith says the national policy statement will give developers the upper hand.
Auckland's other problem is demand. The average house in Auckland now costs nine times the average income. Buyers keep borrowing and banks keep on lending.
The Reserve Bank wants that to stop, and is proposing restrictions linked to income -- "loan to income ratios".
It estimates 35 percent of owner-occupiers are borrowing at five times their income and 59 percent of investors. So if banks were restricted to lending at five times a borrower's income it would hit a huge amount of borrowers.
The Prime Minister is endorsing the move.
Supply and demand are the two problems, and the Government is reaching into the toolbox yet again to pull out two big sticks. It's waving one at councils and one at banks.
The question, as always, will be -- will it do enough?