National leader Judith Collins suggests the Reserve Bank Governor respond to Finance Minister Grant Robertson's request to help control house prices with one word: "KiwiBuild".
"I must say, the irony has not escaped me," Collins told reporters on Wednesday after Robertson wrote to Reserve Bank Governor Adrian Orr requesting him to consider how it can help to stabilise house prices.
"Perhaps the Reserve Bank Governor might just want to say one thing back which is 'KiwiBuild'."
Labour campaigned in 2017 on KiwiBuild as the housing crisis solution, promising 100,000 houses in 10 years. But with just 258 houses built as of September 2019, the policy was 'reset' - the targets were dropped and it shifted towards progressive homeownership.
The latest data from the Ministry of Housing and Urban Development shows 645 KiwiBuild homes have been built so far. A total of 844 KiwiBuild homes have been sold to date, including those sold off the plans.
KiwiBuild has gone through various changes since it was reset. In June, Housing Minister Megan Woods unveiled the details of the progressive home ownership scheme which falls under the KiwiBuild banner.
KiwiBuild was tweaked to allow up to a quarter of unsold homes into the open market, so now 25 percent - up from 15 percent - of KiwiBuild homes that don't sell to people who fit the criteria, can be sold to spectators.
The Government also announced a $350 million fund to support the residential construction sector hit by COVID-19, sold as a complementary programme to KiwiBuild because it uses a similar underwriting process.
The Government shares some of the increased risk associated with COVID-19 by backing developments through underwrites - either purchasing unsold houses from developers or topping up any shortfall - depending on the contract.
KiwiBuild was supposed to help first-home buyers into the housing market, and CoreLogic's inaugural First-Home Buyer report shows the number in the market is actually increasing.
But house prices are continuing to soar out of control. Median prices in Auckland recently surpassed $1 million and the median price nationwide is now above $720,000.
Low-interest rates, combined with property investors and first-home buyers competing for limited housing stock, has caused house prices to soar by 20 percent on the same time last year, defying predictions of a COVID-19 crash.
The Finance Minister has written to the Reserve Bank Governor seeking advice on how it could support the Government by taking house price inflation into consideration when formulating monetary policy.
The Reserve Bank's objective currently only includes keeping inflation between 1 and 3 percent and supporting sustainable employment.
"House price instability is harmful to our aims of reducing inequality and poverty, and is also likely to negatively impact the Government's aim of creating a more productive and inclusive economy," Roberson said in his letter to Orr.
"This is particularly the case where investments in the economy are increasingly being made in the existing housing stock, rather than in other more productive assets."
Robertson appeared to be referring to the Reserve Bank's Funding for Lending Programme (FLP), making up to $28 billion available to banks at the record low interest rate of 0.25 percent, to lend and help stimulate the economy.
These types of monetary policies are used to help reduce unemployment during a recession in the hope that less expensive credit will entice businesses into borrowing more money and thereby expanding.
National's shadow treasurer Andrew Bayly recently expressed concern the policy was being rolled out without any requirement for the new lending to be targeted at productive investment such as helping small businesses.
He thanked Robertson for "following our lead" and writing to the Reserve Bank. Robertson disputes he copied the idea, arguing National wanted the Government to go further than it has by telling the Reserve Bank where to direct its funding.
Orr confirmed he had received Robertson's letter and welcomed the opportunity to contribute to the Government's efforts to improve housing affordability.
But he said he could "assure" Robertson the Reserve Bank "gives consideration to the potential impact of monetary policy on asset prices, including house prices".
He said the Reserve Bank will consider Robertson's suggestion and respond with "considered feedback" in due course.
The Reserve Bank confirmed on Wednesday it would bring back loan-to-value restrictions (LVRs) early next year, meaning banks will once again require a deposit of 30 percent from investors to get a mortgage and 20 percent from home occupiers.
Some commercial banks such as ASB and BNZ have already introduced them ahead of the Reserve Bank's decision.
The Reserve Bank removed LVR restrictions in May for a period of 12 months to ensure that they did not impede banks' ability to support borrowers as part of the mortgage deferral scheme.