Such a crash would make for many more unhappy voters than happy ones.
It's tricky for politicians. They want to be seen to be doing something but don't want to do too much. It's a delicate act taking the steam out of a puffed-up market without collapsing it.
Hence the tough talk with the Reserve Bank, which has only the bluntest of tools with which to attack the problem.
Key's statement is also wonderful political misdirection.
The Reserve Bank is responsible for many things but the housing-price bubble is not one of them. That sheets firmly and directly back to generations of central and local government politicians and their great desire to pack Aucklanders in like sardines to justify their gross expenditure on trains.
The aim has been to cram us around train stations and successive Governments have curtailed Auckland's much-needed expansion.
It has been helped along by the ebullience of voters enjoying the great expansion in their wealth. The house-price boom has made more millionaires than working hard or saving ever has.
That ebullience translates into government support and positivity about the economy and the country's direction.
Only recently has the boom become viewed as a problem and something the Government should do something about.
The Reserve Bank's concern is banking and monetary stability.
That's a long-term objective. It's hard to achieve and very easy to lose.
That's why it's enshrined in law that the Reserve Bank is independent of direct political meddling. The Finance Minister formally sets the price-stability target and the Reserve Bank gets on with the job.
Key's public jawboning undercuts that independence, signals that our much-touted monetary stability is at risk, and is a small chink that could easily open wide on our economic credibility.
That's a bigger issue than house prices.
We have been here before, but not since Prime Minister Robert Muldoon have we seen a PM attempt so directly to influence the Reserve Bank.
The Reserve Bank should be acting on Auckland house prices only if monetary or banking stability are threatened. The supply of housing is a problem of regulation and one for Government to address directly.
It can't point the finger anywhere else.
Key is doing a great job as Prime Minister.
He should stick to that.
He should leave economic and financial policy to Bill English. We need a more considered view on such matters, not one that plays to the crowd and the day's headlines.
