The Government is considering new ways to help families on low incomes buy a home, by having the state retain ownership of the land the houses sit on, reports Vernon Small in the Dominion Post

Finance Minister Michael Cullen had said, without going into any detail, that the slowdown in the construction sector, particularly among house builders, could allow an expanded push on affordable housing without stoking house prices.

It is understood ministers have discussed a "shared equity plus" proposal because the current pilot scheme - and the parallel Welcome Home loan policy - were open to those with relatively high household incomes of between $55,000 and $85,000.

Building houses on Crown-owned land, while retaining the land in state ownership, would allow home owners to raise much smaller mortgages that could be serviced by incomes of the average of $45,000.

Housing NZ chairman Pat Snedden admitted this year that the "affordable" range at its Hobsonville development would be $350,000, requiring an income of $70,000 a year to service a mortgage with a minimal deposit.

Meanwhile, Dr Cullen urged New Zealanders not to talk themselves into recession amid more gloomy economic news.

Following Treasury's warning this week that the economy could be in the grip of a recession, a Institute of Economic Research survey for the June quarter had a net 18 per cent of firms reporting a fall in their own activity.

A net 18 per cent also expected their trading activity to fall between now and September.

Dr Cullen said the economy was "pretty flat". Rising oil prices and fallout from United States financial markets were continuing to impact.

National was not "dancing on the grave" of the economy for fear of alerting the media to the fact that a slowing economy made it harder to promise bigger tax cuts.

Dr Cullen said $2 billion a year of tax cuts would start to take effect from October, helping to offset the downturn in retail spending.