Urban councils will have to tie housing supply to population data under a new Government directive aimed at slowing down Auckland's housing crisis. And if they fail, there'll be a price to pay.
Building and Housing Minister Nick Smith released the National Policy Statement on Urban Development Capacity (NPS) in his Beehive office on Thursday morning.
But it's been criticised by Opposition parties, which say Dr Smith is "firing blanks".
Dr Smith says the current situation, with the average Auckland house price about to top $1 million, can't go on.
"If section prices stay up at that $450,000 level, we will long-term be looking at million-dollar houses in Auckland which is unsustainable and a huge challenge for those young families who aspire to own a home."
He says the statement provides a "very clear directive" to urban councils they have to provide enough capacity for housing and businesses to match population growth, based on Statistics NZ figures.
"They're going to be required to monitor and respond to housing affordability data, to building and resource consent figures and the value of land on their urban boundaries."
Dr Smith warns if they don't meet those requirements, they'll be required by law to change what they're doing.
"They are going to be required by law to take into account the very significant difference between theoretical capacity in their plan and that which can practically be built, that is, has the infrastructure and is commercially feasible."
The statement also requires councils to oversupply land and development capacity by 20 percent so there's enough competition to bring section prices down.
Government agencies, councils and infrastructure providers will also have to work together better and to make consenting "customer-friendly".
The edict also means councils need to take into account first-home buyers when making planning decisions, which they haven't been doing, Dr Smith says.
"Effectively when councils are making their planning decisions there is all the process and all the voice for the local communities, but there is not the strong voice for the young Kiwi family trying to get into a home.
"The NPS provides that voice."
But Dr Smith was quick to point out the statement wasn't the "silver bullet" to fixing the housing problem, saying it was part of a broader plan on housing.
"This is not the end of the programme."
More work is being done with new urban development authorities, reform of the Unit Titles Act and Building Act changes.
Proposed changes to the Resource Management Act will include the requirements of the NPS.
But that's led to United Future leader Peter Dunne to say the current proposal for RMA reform needs to be withdrawn because the new statement makes it "redundant".
"The Bill currently before the House goes way beyond the housing issue, traversing completely separate issues like water management and wider regional planning.
"Because the Bill is seen as a wholesale attack on the Resource Management Act, it is struggling to gain support," Mr Dunne says.
Support from United Future and the Maori Party for the current change is tentative and conditional.
Labour's housing spokesman Phil Twyford says the NPS won't make much difference.
"The Government has been talking tough for the past few weeks. You'd think this was going to be the big gun, but its only Nick Smith firing blanks.
"The land-bankers and speculators will read the NPS and rub their hands with glee."
He says the plan doesn't address who will pay for infrastructure or remove the urban growth boundary -- an idea Mr Twyford proposed and was supported by National.
The Greens say the statement is "good in theory" but does nothing practical in getting people off the streets, and out of cars and garages into homes.
"The focus on the council is a red herring designed to distract New Zealanders from the real causes of the housing crisis -- National's failure to stop speculators, restrict non-resident foreign buyers, or build affordable homes for people who desperately need them," finance spokeswoman Julie Anne Genter says.
New Zealand First leader Winston Peters says the Government is using the statement to cover its "derriere" and divert attention from speculators and immigration.
Meanwhile, the Property Institute says making councils open up land for future growth is a good idea, but cautions it is one step of many in bringing house price inflation down.