A think tank says New Zealand's government and councils need to free up more land to stop land prices spiralling out of control.
The NZ Productivity Commission on Wednesday released its final report on using land for housing. It takes aim at the practise of "land banking" and wants the government to be able to tell councils to free up land.
The boom in the housing market is shutting aspiring owners out, creating overcrowding and preventing people from taking up jobs in the cities, says commission chairman Murray Sherwin.
New Zealand's urban planning is not responding to the market and the system needed to change, he says.
The final report has made a number of recommendations to make planning more responsive to demand.
"The most important thing that councils and the government need to do is create a credible commitment to release and service more land and to bring land price inflation under control," Mr Sherwin said.
"We need to break the pattern whereby there is more money to be made from simply holding land instead of using it."
If councils could commit to freeing up land, then government would need to step in and make it happen.
"Government should set a limit for land price inflation which would clearly signal to councils, landowners and developers the conditions under which government would intervene to make more land available."
The commission's recommendations were flagged in a draft report released in June.
