A prominent housing economist wants a rethink about how inflation is measured.
Shamubeel Eaqub says the consumer price index (CPI) does not include house price inflation - and that's a problem.
"What you measure really does dictate what you do, and I think the way we measure housing in many different parts of our lives is not really reflecting what is going on in reality."
The CPI measures what people spend on goods and services.
Some housing costs are captured - rents, property maintenance, rates and the cost of purchasing a new house minus the land.
But Statistics New Zealand points out sales of existing houses are excluded because they don't add to the stock of housing available for households.
"We have to understand that housing is an important part of what people do, and second-hand house purchases are important, rents on the margin are very important, the cost of land in the construction of housing is very important," Mr Eaqub said.
"If you're not adding those things, it's not giving a true and complete picture of what costs New Zealanders face."
Inflation is 0.4 percent, and Mr Eaqub calculates that if house price growth was included, inflation would have been 2.5 percent, or more, in each of the last three years.
Council of Trade Unions director of policy Bill Rosenberg said households were under more pressure to make ends meet than the inflation figures suggested.
"The distinction that statisticians draw between CPI and housing on the other is not a very real one for most households."
"They just see the cost of housing going up and particularly for first home buyers the cost of buying a house going up to the point where it's just beyond reach for many, many households," Dr Rosenberg said.
The CPI was also designed for the Reserve Bank to help it set interest rates.
Mr Eaqub said if the way inflation is measured is incomplete, it could flow through into bad policy decisions.
But Economics New Zealand managing director Donal Curtin isn't convinced the CPI needs to be overhauled.
He said the Reserve Bank governor, Graeme Wheeler, understands the dilemma he's in when confronted with low inflation - which would suggest a rate cut - and an overheated housing market - where he would lean toward a rate hike.
"Unfortunately he can't use the same instrument for both things cos he needs to raise it on one side and lower it on the other. So that's not do-able."
"So what he really needs to do is - if he's concerned about house prices - he needs to have some other tool in the tool box because interest rates alone can't do it," Mr Curtin said.
The Reserve Bank is set to tighten the screws further on investors from the beginning of October to rein in the housing market.
But Mr Eaqub argues the worsening situation demands Mr Wheeler go much further.
"The measures that we've seen from the Reserve Bank and the banks recently are helpful and are heading in the right direction."
"But I want to see a far grander set of changes which really restrict the amount of lending that goes into housing. That is still not slowing enough and we need to go faster and harder."
Mr Eaqub is adamant that unless rampant house price inflation and record high indebtedness are brought into the mix, the Reserve Bank and other policymakers may underestimate the severity that a future housing collapse could have on households and the economy.