The Financial Times has taken a swipe at the Government for using the Reserve Bank as a "convenient scapegoat" to fix the housing crisis rather than dealing with supply.
The British newspaper's editorial board was responding to the Government last month instructing the Reserve Bank to consider the impact on house prices when making monetary and financial decisions.
The editorial board questioned the decision, saying: "Engineering deflation in consumer prices to address the particular, idiosyncratic, problems of the housing market would be a serious mistake."
In other words, the board doubts the housing crisis can be solved by the Reserve Bank tinkering with interest rates and requiring would-be homeowners to have bigger deposits. It says the real issue is housing supply.
"Central banks should reconsider their stimulus policies as they are only delaying and deepening the eventual bust," the board wrote. "Interest rates cannot be used to solve every problem and central banks have struggled enough to try to hit their existing inflation targets."
The Financial Times accused the Government of using the Reserve Bank as a "convenient scapegoat for politicians who are unwilling" to address the underlying issue of housing supply, "even in a land-rich country such as New Zealand".
"Changing regulation and reforming planning law is a more sensible way to address the deficiencies of the housing market... To solve New Zealand's housing problems, Arden's [sic] administration will need to look much closer to home."
Finance Minister Grant Robertson declined to comment.
Robertson wrote to the Reserve Bank in November seeking advice on how to stabilise house prices with interest rates at record lows, after data showed prices had soared 20 percent on the same time the year before.
The Reserve Bank had previously pushed back against the idea, saying it "could make monetary policy less effective and impact financial market efficiency".
The Reserve Bank has been doing its bit to cool the housing market, by reinstating loan-to-value (LVR) restrictions from March, meaning property investors must stump up a 30 percent deposit for a house, and first-home buyers 20 percent.
The Reserve Bank also has its 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.
Some have questioned if it will add even more pressure to an already stretched housing market, given there is no requirement for banks to target the lending to productive investment, rather than property investors.
Robertson hasn't ruled out making tax tweaks to ease demand. Prime Minister Jacinda Ardern has already ruled out a capital gains tax as long as she's leader, but changes could be made to the bright-line test - the tax on investment properties.
The bright-line test means if a property is sold within five years, capital gains are taxed at the owner's income tax rate. The family home is exempt. There is speculation it could be extended beyond five years.
The Government could also tweak KiwiBuild, which has already gone through various changes, since it failed to deliver on its targets. The underwriting as part of KiwiBuild still exists. So far KiwiBuild has delivered 792 homes.
The Government will be making an announcement in the coming weeks on how to both reduce speculative demand on housing and enable more supply to be built.
The Government is trying to fix the housing crisis by replacing the Resource Management Act (RMA), the complex planning law blamed for holding back new developments. But with over 800 pages to be replaced, it won't be passed until 2022.
The National Policy Statement on Urban Development will require councils to reduce planning constraints and plan for growth, allowing for greater intensification in cities, but National says it won't have any impact until 2024.