The Reserve Bank wants changes on the tax treatment of housing to influence the demand and supply balance of the housing market, but it is obvious any extra impositions are not needed in the South.
In a speech yesterday, deputy governor Grant Spencer appeared to destroy the central bank's own arguments about why the loan-to-value lending restrictions were needed across the whole country.
Most of his 18-page speech to the Rotorua Chamber of Commerce was about the housing pressures in Auckland, with some mention of Christchurch.
For more than 18 months, commentators in the South have been calling for lending restrictions to be eased to, among other reasons, encourage people to move south for work and housing.
Mr Spencer said house sales slowed markedly in the immediate aftermath of LVR restrictions, with all regions trending down except Christchurch.
The slowing was evident for all buyer types, although there were shifts in the composition of sales. There was generally a larger fall in sales to first-home buyers and existing owner- occupiers.
Sales to investors remained relatively stable while ''new to the market'' and ''returning to market'' sales increased - reflecting purchases by new migrants and returning New Zealanders.
House price inflation slowed from an annual rate of 9.3% in September 2013 to 4.9% in September 2014. The slowing in house price inflation was most evident in Auckland, with a more muted effect elsewhere, he said.
On nearly every page of the speech, Mr Spencer references Auckland, including data pointing to a strong resurgence in that city's housing demand.
New listings on to the market had not kept pace with the increase in house sales, causing inventory to fall from already low levels and adding to house price pressures. This was true for most regions but was most pronounced in Auckland, where current inventory would be exhausted in only 12 weeks at the current level of sales.
Consistent with this, annual house price inflation in Auckland had been increasing, reaching nearly 17% in March.
Mr Spencer also touched on population growth over the last year contributing to increased demand for housing, particularly as migration levels reached record rates.
However, more than half of the net migration inflow had settled in Auckland.
That had provided a major boost to Auckland's population, which grew by nearly 34,000 people in the year to June.
Although consents issued for new dwellings in Auckland had continued to increase, reaching 7700 in the year to February, they had been insufficient to match the surge in population, let alone cut into Auckland's housing shortage.
Mr Spencer said people-per-dwelling was a useful metric for looking at the physical balance between housing supply and demand.
Over time, people-per-dwelling should slowly trend down as the population aged, families got smaller and people became wealthier.
That meant the number of dwellings required would tend to increase at a faster fate than the population. If residential building was insufficient to keep up with population growth, the number of people per dwelling would trend up rather than down.
In Auckland, people-per-dwelling had been increasing since 2008, while it had fallen elsewhere in New Zealand. The sharp rise in people per dwelling in Auckland in 2014 highlighted home building remained well below the level required to accommodate the rising population.
The Reserve Bank estimated the shortage of houses in Auckland had increased in the past year to between 15,000 and 20,000 houses.
Mr Spencer said an increase in investor demand in Auckland could be inferred from various indicators.
There had been a continued fall in the rate of home ownership, which reached a record low of 61.5% in 2013; there had been an increase in the share of house sales going to investors since October 2013; and rental inflation had remained well below house price inflation.
Residential investors had continued to expand their interest in housing as rental returns had fallen, pointing to an excess demand for home ownership over and above the simple excess demand for accommodation.
Auckland's outlook for new housing supply was different from that of Canterbury, which was still be influenced by the earthquakes. In about two years, residential construction in Canterbury was expected to tail off.
Auckland's outlook was very different, he said. Residential construction would need to continue at a high pace for many years.
At current rates of building, it appeared the shortage of housing was getting worse, not better. Auckland Council estimates showed more than 10,000 new homes each year would be needed to satisfy future population growth.
It could take many years to work off the current housing shortage.
While the Auckland Housing Accord was helping, significant factors continued to hold back new housing supply in Auckland, Mr Spencer said.
Those included a limited supply of land for housing, a restrictive urban planning regime, public concerns over densification, uncertainty around future infrastructure development and a fragmented and inefficient residential building industry.
The land component of housing costs in New Zealand had grown considerably over the past 20 years, with land now accounting for more than 60% of the total cost of a new dwelling in Auckland and around 50% for the rest of the country.
''The Auckland plan establishes a rural urban boundary that provides scope for urban growth outside of the old municipal urban limit. However, land blocks with disparate ownership and speculative investment in 'land banking' continue to tie up large areas of buildable land.''
The relatively high cost impost for apartments was due to a raft of height, area and other planning restrictions that appeared to have contributed to the relatively low number of apartment consents in Auckland in recent years, Mr Spencer said.
Auckland also had a relatively low proportion of apartments compared with Sydney - 25% versus 39% of total dwellings.
Rising house price inflation, particularly in Auckland, represented a risk to financial and economic stability. Irrespective of the mix of demand and supply-based factors, the longer excess demand persisted, the further prices would depart from their underlying fundamental determinants and the greater the potential for a disruptive correction.
