UPDATED 11.08am The opposition says the government's $1 billion investment in infrastructure shows John Key and the National Party is still not taking the housing crisis seriously.

LISTEN ABOVE: Shamubeel Eaqub talks to Andrew Dickens

The government's set to borrow the money to lend to councils to invest in roading and water, hoping to see thousands more houses built as a result.

MORE: PM reveals $1 billion plan to ease housing crisis: Labour responds

Labour leader Andrew Little said the reality is 42,000 New Zealanders are homeless and thousands more can't afford to buy their first home.

"Nothing that's been announced is going to help a single extra New Zealander, who is in the market to buy their first home, getting into that first home."

The housing crisis has been around for a while and the government's been in denial about it, he said.

"Putting in place a fund of $1 billion for infrastructure for houses, when the shortfall is actually multiple billions of dollars, doesn't seem to be taking the issue seriously at all."

Independent economist Shamubeel Eaqub said a government loan of $1 billion to boost infrastructure across five local bodies is not going to fix the problem.

Mr Eaqub told Andrew Dickens it's too small an amount, relative to the scale of the problem that we have.

He said particularly in Auckland, the infrastructure needed is not only in greenfields but there is also demand for increasing density and improving public transport.

"It is such a big issue and we're catching up with decades of under investment. This is a very small movement, in a very big problem."

Mr Eaqub said giving local bodies 10 years to repay infrastructure loans is not long enough.

The infrastructure is intergenerational and more often that not it will be around for 50 to 100 years, he said.

"We really want to be able to borrow for a much longer term and repay it over a much longer term."

However, Social Housing Minister Paula Bennett said there are hopes the issue of homelessness will be eased by the massive infrastructure spend-up.

The announcement is a game changer as it will provide a level of certainty that social development housing can go ahead, she said.

"It's always the non-sexy things, like pipes under the ground, the roads that need to get there, making sure that that developments able to move ahead."

The Property Institute said the government's investment for infrastructure is another step forward but chief executive Ashley Church told Mike Hosking ultimately, it'll be the private sector that gets houses built.

"All of these measures which are around the council or the government being involved and being the developer, while they're great and they show leadership, they're not the final solution which is actually going to fix the problem."

Mr Church said we need to get the private sector involved in wholesale, large, development of houses - and we need to do it quickly.

Mr Little said his party will announce a comprehensive package to deal with the housing crisis next week.