Critics aren’t wrong to quip that New Zealand doesn’t have an economy but rather a housing market with some dairy farms, kiwifruit orchards and holiday resorts tacked on. Five million New Zealanders have about $400 billion borrowed against their housing stock, about a quarter of its $1.6 trillion value. But that doesn’t mean it makes sense to crash the value of the middle classes’ major asset, one that often secures the growth of their small businesses.

New Zealand’s housing affordability issue is as much about productivity growth and wages being too low as it is about property being too expensive. Driving a substantial proportion of households into negative equity, especially millennials who bought at the peak of Dame Jacinda Ardern’s Covid-era house-price boom, isn’t going to help them grow the economy or win National re-election.

The goal of a quarter-acre or, more realistically, eighth-of-an acre section on which to bring up kids is deeply embedded in middle-class aspirations, while character homes in leafy neighbourhoods symbolise National’s most loyal Auckland support base.

National began to get offside with those core supporters when its then housing spokeswoman, Nicola Willis, negotiated a housing accord in 2021 with then Housing Minister Megan Woods, also Labour’s campaign chairwoman.

Labour knew exactly what it was doing. The day the accord was unveiled by Willis, Woods and then-National leader Judith Collins from the podium of truth, Ardern’s top strategist called me, chortling that Labour couldn’t wait to see how National would sell the deal to the good people of Remuera, Epsom, Parnell and Tāmaki.

While National leader Christopher Luxon called time on the accord last year, Bishop has remained obsessed with driving down rents and house prices. Within weeks of the Government being sworn in, he won Cabinet approval for a paper he wrote personally that proposed bluntly to “flood urban housing markets” to drive prices down. Every minister, from Luxon down, signed up to that goal, assuming they maintain the old practice of reading their Cabinet papers before agreeing to them.

Willis and Bishop are both Wellingtonians, so can perhaps be forgiven for misunderstanding the politics of Auckland residential property. Both have also been clear that their focus is on renters and first-home buyers, believing a property-owning democracy is essential to both social cohesion and National’s longer-term electoral prospects.

Fingers might more fairly be pointed at ministers from Auckland’s leafy suburbs for not recognising the political dangers, as well as those representing home-owning and median-voter electorates throughout the region.

With Act now holding National’s old fortress seats of Epsom and Tāmaki, it is up to the likes of Remuera residents Luxon and Justice Minister Paul Goldsmith, Collins in St Heliers and Simeon Brown in Howick to ensure National keeps in touch with its core voting bloc.

Also unhelpful is pigeonholing National backbenchers who raise concerns as trouble-makers rather than valuing them as essential contributors to the team. Luxon takes pride in getting weekly caucus meetings completed in under an hour. He’d be better to let them run longer to allow more sense-checking by backbenchers of ministerial decision-making.

National strategists say they realise the two million figure has become a lightning rod for criticism. They say a live option is to allow Auckland Council to include new capacity in the CBD, which is excluded for complicated legal reasons, in its growth projections. That, they argue, would have the net effect of lowering the intensification required in the suburbs and requiring it more in the areas that most people agree makes greatest sense. Others suggest that plans to extend the city’s boundaries with more greenfield developments are also likely to be dropped.

National and Wayne Brown would then be able to position intensification as being mainly about the central city’s rejuvenation when the new City Rail Link opens later this year – the construction of which has done so much to trash the central city’s economy and community over the last decade.

Bishop’s programme could then be positioned as being about developing the CBD into a lively, high-population, low-crime inner city, as found in most developed countries, while protecting the Kiwi way of life in the suburbs. That would also support Brown’s vision of progressively redeveloping the waterfront.

Education Minister Erica Stanford might have to come to the party with a couple of inner-city primary schools so that central Auckland can become viable for families that want apartment rather than suburban living. Police Minister Mark Mitchell has already promised greater on-the-beat policing in the central city.

Across the aisle, Labour and its urbanist friends have always been keener on intensification in the CBD and around transport hubs than outward expansion. It thinks National just needs to make some decisions to provide certainty and let Auckland and the construction industry get on with it. Party strategists say investors would have nothing to fear if Labour takes power later this year.

But, if National executes its planned U-turn competently, that will become much less likely.