Finance Minister Bill English insists people living either in cars, or houses nine times the median price, does not mean the housing market has failed.

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He said, on TVNZ's Q&A programme this morning, that it's not the government's fault first-home buyers are being crowded out of the market by investors.

He instead pushed the blame to local Council, saying the housing shortage is the result of misdirected planning in Auckland which has constrained supply and driven up prices.

However, the Labour Party's Finance spokesperson Grant Robertson argued that a warm, dry home was a basic necessity - a core responsibility which he alleged the government was failing badly.

"At the moment we've got the lowest home ownership rate in sixty-four years and people in cars and garages," he said.

"Every aspect of the housing system needs to change."

Robertson said the government needed to show leadership "by saying 'We will get in there and provide the capital to build those homes, we won't let people land bank', which is what is happening in the special housing areas right now."