House pricing: Heatley agrees on need for land reform – but vague on answers

Housing Minister Phil Heatley says land reform is needed to bring down house prices, but sees local rather than central government leading the charge.

Picking up on Finance Minister Bill English's comment that house pricing is "ridiculous," Mr Heatly told TV3's The Nation at the weekend the "the fundamental issue is the cost of land".

"The cost of sections is so high that when a builder comes along and buys a bare section, he has to build a flash big house to make any money," Mr Heatley said.

City boundaries needed to be extended, but it also had to become easier to intensify housing.

"You’ve got an elderly couple in Auckland, and I tell you what there's thousands in this situation, they're in a quarter acre or a half acre section, they'd love to cut it in half, build a new house for them on one half and sell the other bit off, and make, you know, three or four hundred thousand dollars for their retirement.

"They don’t do it because it costs them $40,000 two years and they may not even be consented. So that’s crazy," Mr Heatley said.

But the housing minister was short on specifics about how the craziness could be addressed.

The government was talking to Auckland mayor Len Brown, who was also concerned about the problem, Mr Heatley said.

The minister pointed out his government and Mr Brown's council are co-investing in an $8.5 million, 20-year project to re-generate the lower socio-economic areas of Tamaki (neighbouring Auckland's posh eastern suburbs). Elements of the project will involve more intensified housing.

Most cities had unproductive land that could be released for housing, he said.

Others see the issue as more of a central government problem.

In the wake of a Productivity Commission report that found the cost of land too high, due to artificially constricted supply, ACT leader John Banks has called for a full review of the Resource Management Act.

Mr Banks says in Auckland, land now accounts for 60% of the total cost of a home, as opposed to 40% elsewhere.

Watch Phil Heatley's full interview here.