Local government should step in and help build houses to make Auckland house prices more affordable, an economist says.
A new housing affordability survey has found Auckland is now the fourth most expensive city in the world to buy a house, ahead of cities including London and Los Angeles.
Houses in Auckland now cost 9.7 times the median income.
Auckland-based economist Shamubeel Eaqub told Checkpoint with John Campbell local government needed to step in and build houses close to the city.
"The problem is we're not building enough homes close to where people can get to work, have fun, transport," he said.
"That's really what matters, and this is where local government does have a big role to play. This is not about picking on them but they hold the ultimate tool in terms of providing the solution."
Mr Eaqub said it was also critical to build houses where there were transport options to avoid congestion issues on roads.
The median house price in Auckland is now 9.7 times the median income, according to the Demographia International Housing Affordability Survey (file). Photo: RNZ / Diego Opatowski
Auckland's deputy mayor said the government needed to work with the council to tackle the city's housing affordability crisis.
Penny Hulse says the city needed more houses built close to the city centre and transport networks.
She said through its unitary plan - due to be finished this year - the council wanted to help young people see a future in Auckland and it was time the government worked with the council to make that happen.
Opposition MPs said central government had failed in its response to the problem.
Labour Party housing spokesperson Phil Twyford said the survey showed the National-led government had killed off the dream of home ownership for young New Zealanders.
Mr Twyford said the government had allowed the country's biggest city to become a housing basket-case.
"The report shows that Auckland's housing is less affordable than New York, Los Angeles, London, Tokyo," he said.
"It is confirmation that, after nearly eight years in government, that National's housing policy is a total failure."
Labour MP Phil Twyford Photo: RNZ / Alexander Robertson
New Zealand First housing spokesperson Denis O'Rourke agreed young New Zealanders were now virtually locked out of the housing market in Auckland.
Central government inaction was to blame, he said. "Well, they've been sitting around for several years now twiddling their thumbs, not doing anything effective about housing in Auckland.
"There is only one way... to fix the Auckland housing crisis, and that is for the government to be directly involved in investment in housing in Auckland."
Green Party housing spokesperson Metiria Turei said the government was not bothered if young New Zealanders could not buy homes.
"National doesn't care about any of those things," Mrs Turei said.
"[Prime Minister] John Key does not care if you can't afford to live in Auckland anymore. He can, and the people he knows can, and that seems to be fine with him."
More houses on the way - PM
Prime Minister John Key Photo: RNZ / Alexander Robertson
Mr Key told Morning Report Auckland house prices were due to a combination of supply and demand, confidence about Auckland, low inflation and low interest rates.
A wide range of houses were available and people were able to buy a first home that was less than the median price and work their way up, he said.
"In broad terms, I think everyone acknowledges that Auckland house prices have been rising too rapidly... But, if you look at what's been happening in Auckland, we have the highest level of construction in the last 11 years, we now have 106 special housing areas in Auckland, the number of consents is rising rapidly.
"There's no question you need more supply; there's no question we're pushing things through as fast as we can."
Housing Minister Nick Smith said, when interest rates were taken into account, home ownership was significantly more affordable now than when National came to office in 2008.