Prime Minister John Key says the Auckland housing market is not over-valued, as demonstrated by the fact there has been no market correction in the last 45 years or so.
John Key at the Post Cabinet Conference, Monday 13th of April 2015. Photo: RNZ / Alexander Robertson
Reserve Bank Deputy Governor Grant Spencer warned the imbalance between housing supply and demand poses an increasing risk to financial and economic stability.
He said the problem had become worse since late last year, particularly in Auckland, where there was a supply shortage and prices had tripled since 2002.
Mr Key said while prices in Auckland were rising more quickly than the Government would like the market balanced out supply and demand.
"I mean one of the reasons why probably haven't had a significant correction is because over the last 45 years there's a general view that housing prices are not over-valued relative to a whole lot of different factors."
Mr Key said the Government remained opposed to the likes of a capital gains tax, as increasing supply was the best response.
Govt sends warning over special housing
Meanwhile, several landowners are being warned they will be stripped of the chance to get fast tracked consents in special housing areas if they do not start work.
Photo: RNZ / Diego Opatowski
Special housing areas have been set up to speed up and encourage home building in areas like Auckland.
Once those areas have Government approval, they are supposed to get fast-tracked consents with limited notifications and appeals.
Mr Key said 84 special housing areas had been approved and work has already started in 70 of those.
But he said there had been little progress in the other 14 areas.
"I think they'll probably find in the next few days they'll be getting a letter from Nick Smith to say that if they don't progress and bring those special housing areas on the the market then those special housing areas will be taken off the market."