Smith says there is only so much a government can do to control a housing market. "It's a market. So we don't have complete control of the price or any of those factors. Our job is to get the regulatory framework right. That regulatory framework was failing. We had, for a decade, under-supplied the Auckland housing market," he says.
Smith says there has been a combination of factors compounding the Auckland housing shortage. The Christchurch rebuild has consumed a lot of building resources. The Auckland residential construction industry has been growing from a relatively low base. In the past 18 months, Smith says the 10,000 Aucklanders leaving for Australia has dwindled to almost nothing as the Australian economy slowed.
"You'd be a brave person to pick what the Australian economy is going to do the next two or three years. If the Australian economy picks up again, then that would make my job a lot easier. But I don't know," says Smith.
Opposition political parties criticise Smith for not bolstering the housing market during the Global Financial Crisis (GFC), and allowing the construction industry to deteriorate.
"House prices in 2009 and 2010 were dropping. There was a whole run of financial companies that went broke and lost billions of dollars in residential developments. Hindsight is a beautiful thing," says Smith.
Smith said people in the private sector were not lining up to create more housing during the GFC. Instead, the Government put more than $300 million into the home-insulation programme. "In my view that was a wise choice at that time."
He believes the supply chain of new housing is starting to work for Auckland.
"When I became minister we were building 4,000 houses a year in Auckland. We are now building over 8,000 a year. We are going to need to keep a foot on the accelerator to maintain that growth if we are going to overcome the shortage."
Consents for apartments has also grown strongly over the past two years.
"The Government's position is that it is going to be of a mix of intensification plus greenfield developments," Smith says.
He says Auckland house prices have increased the way they have because of a lack of supply rather than offshore purchasers.
On October 1, the new bright line test is meant to identify house purchasers from speculators and overseas buyers. It will tax gains made from the selling of a residential property within two years of purchase unless it is the seller's main home.
"That's also going to ensure that we get better information around the level of ownership, not on the basis of ethnicity, but on the basis of whether they are Kiwi citizens or residents."
Labour housing spokesman Phil Twyford says Auckland needs 13,000 new homes a year to keep up with the increasing population, which is 5000 fewer than Smith's target. Twyford says the Government should have acted during the GFC. "We had the lowest interest rates in a generation. We had an army of builders with no work. It would have been the obvious time for a Government-backed building programme," Twyford says.
He claims the lack of a home-building programme back then resulted in many skilled tradespeople leaving the industry and the country.
"It's one of the reasons why a very high level of poor-quality building is going on."
In June, the Auckland Council reported that 25 to 40 per cent of all buildings under construction were failing inspections. Twyford says this is largely because of a lack of skilled tradespeople.
"Any fool could see that with the Christchurch rebuild and Auckland's shortage of housing that there is going to be considerable demand for construction for many years to come," says Twyford.
He says Labour's KiwiBuild plan would build 100,000 affordable homes over 10 years. These homes were planned to sell at around $385,000 to $450,000. Twyford says according to international standards, the family home should not cost more than three times the household income. But he says Auckland house prices are now 10 times that.
"One of the things with Special Housing Areas is that there is nothing to stop those houses that have had the special fast-track consenting and so on from being snapped up by offshore speculators."
Twyford says these offshore speculators are bidding up house prices beyond the reach of local buyers and having an impact on the market. Labour would ban non-resident foreigners from buying existing homes.
"It's much better instead to channel that investment into building new homes," he said.
Twyford says the SHAs have come too late and that the Government has been in denial about the housing crisis. He is for more high-density housing, reforming planning rules and a massive Government-backed building programme such as KiwiBuild.
Twyford says with half the population living in rental accommodation, the Government needs to help tenants. He wants more security of tenure and legislated standards to keep homes warm and dry. At the moment many liveable homes are being land banked. Twyford says this is one of the side-effects of rampant property speculation and particularly non-resident foreigners speculating in our housing market.
"They're interested in long-term capital gains. They are not interested in being landlords and renting these houses out."
Twyford says that if you look at the number of vacant homes in the last census and take into account homes being sold and vacant rentals, you end up with around 15,000 to 16,000 homes that are potentially land banked.
Green Party co-leader and housing spokesperson Metiria Turei says there are problems with Smith's Special Housing Areas.
"They have a very low proportion of affordable housing. They are also mostly in greenfield areas, which have very high infrastructure and transport costs." Turei says the National-led Government is not taking the housing crisis seriously. She says New Zealand now has the lowest home ownership rates since the 1950s and it's particularly down for Maori.
"The Government denied there was a crisis. They've done nothing for a number of years and we now have a series of half-baked measures that are not working."
Status of the Special Housing Areas
• Master Planning Stage 21
• Applications for Qualifying Developments 19
• Building Resource Consents Issued 16
• Earthworks Begun 10
• Home Construction Underway 20
• Have SHA Status Total 86
• David Maida is a freelance journalist.
