WELLINGTON, March 23 (Xinhua) -- The New Zealand government revealed its package housing plan on Tuesday to cool down the soaring property market.

"This is a package of both urgent and long-term measures that will increase housing supply, relieve pressure on the market and make it easier for first-home buyers," Prime Minister Jacinda Ardern said at a press conference of the cabinet.

"The housing crisis is a problem decades in the making that will take time to turn around, but these measures will make a difference. There is no silver bullet, but combined all of these measures will start to make a difference," Ardern said.

Housing Minister Megan Woods said the government is speeding up the pace and scale of house building with a 3.8 billion NZ dollars (2.7 billion U.S. dollars) Housing Acceleration Fund.

"We estimate the Housing Acceleration Fund will help green light tens of thousands of house builds in the short to medium term.

"Investment in infrastructure has been identified as one of the key actions the government can take to increase the supply of housing in the short term."

"This fund will jump-start housing developments by funding the necessary services, like roads and pipes to homes, which are currently holding up development," Woods said.

Deputy Prime Minister and Finance Minister Grant Robertson said property investors now make up the biggest share of buyers in the market so it's essential the government takes steps to curb rampant speculation.

"Extending National's bright-line test and removing interest deduction loopholes for investors will dampen speculative demand and tilt the balance towards first home buyers."

"The New Zealand housing market has become the least affordable in the OECD. Taking action is in everyone's interests as continuing to allow unsustainable house price growth could lead to a negative hit to the whole economy."

"House price increases of the magnitude we have seen in recent months are not only harmful to affordability, they also present a risk to economic stability.

"Our plan also encourages investment in new builds. To support our goal of increasing supply, we will keep the bright-line test for new build investment properties at the current five years," Robertson said.

The tax system favours debt-driven residential property investment over more fully taxed and more productive investments. To reduce investor demand for these investments, the Government will remove the advantage investors have over first home buyers.

"Cabinet has agreed to remove the ability for property investors to offset their interest expenses against their rental income when they are calculating their tax," Revenue Minister David Parker said.

Ministers are also considering closing a loophole on interest-only loans to speculators. The Reserve Bank of New Zealand will report back to ministers in May on this and any proposals around Debt to Income Ratios, particularly for investors. The Reserve Bank cut the official cash rate (OCR) to a record low of 0.25 percent since March 2020 as an emergency stimulus to the economy amid COVID-19.

New Zealand's house prices hit new record highs in the last several months in a row despite the pandemic, while record low interest rates boosted demand for housing and credit. As the housing demand kept high, the supply touched low. In some regions, inventory levels were at lowest point ever. Enditem