Former Reserve Bank Governor Don Brash has placed the blame for the Auckland housing crisis squarely at the feet of the Government, saying prices are three times higher than they should be.
The average price of an Auckland property is approaching $1 million and there are signs the city is starting to bleed workers and young people, who fear they'll never be able to buy a home.
The Government denies it's a crisis, and plans to let councils borrow money to build infrastructure, while Labour is promising a massive Government-led building programme.
On Thursday the Reserve Bank said it was considering tightening lending restrictions to investors (loan-to-value rations, or LVRs) and implementing debt-to-income ratios, but made no immediate changes - inaction criticised by BNZ's chief economist.
But Dr Brash says it's not the Bank's job to keep house prices in check - only the Government and Auckland Council can do that.
"Controlling Auckland house prices is not a Reserve Bank responsibility, and we know from the experience of the last couple of years, changing the LVRs has only a temporary effect on Auckland house prices. It isn't the solution."
Dr Brash led the Bank for 14 years, and says presented with the current situation would have said "pretty much" the same things Deputy Governor Grant Spencer did on Thursday.
Asked how much Auckland houses should cost, he says "about one-third of what they are now", which won't happen without a market crash.
"It's a political issue - no politician, left or right, wants to see Auckland house prices drop by two-thirds. That's the problem. The system is controlled by politicians. Politicians have created a situation where house prices in Auckland are utterly absurd."
He says there's no way to build affordable houses without existing homeowners taking a hit.
"If you can build a house down the street for $300,000, why would you pay $900,000 for a house three miles away? You can't do it."
In addition to creating supply, he says the Government needs to look at migration, which is at record highs - but that might fix itself without any intervention, particularly if the Australian economy booms again.
"All of a sudden the huge influx of New Zealanders will reverse."