Housing Minister Nick Smith says there's no housing crisis in Auckland or Christchurch.
His comments come as a new report indicates housing affordability improved slightly in the last quarter.
The Home Affordability Report by Massey University's real estate analysis unit found housing affordability improved by 1.47 per cent during the quarter to August.
Its calculations were based on median house prices, average mortgage interest rates and average wage rates.
It followed a $2000 reduction in the national median house price, a 72 cent increase in the average wage rate and a reduction in the average mortgage interest rate from 5.57 to 5.52 per cent.
Regionally, Auckland, Wellington, Central Otago/Lakes, Southland, and Canterbury/Westland showed improved affordability over the quarter, while affordability declined in Hawke's Bay, Manawatu/Wanganui, Otago, Taranaki and Nelson/Marlborough.
However, when viewed annually Auckland's housing affordability still deteriorated, and the city is still the nation's least affordable region, the report finding it was 35 per cent less affordable than the national average.
The report's author, Professor Bob Hargreaves, did not anticipate the downward trend to continue.
"If you take into account the comments of the Reserve Bank Governor recently about interest rates increasing, you could say there are some headwinds on the horizon," he said.
"The outlook for affordability is a bit grim, I'm afraid."
Dr Smith said he didn't put too much weight on a single quarterly measure of housing affordability, "although I do note that it has improved substantially since housing affordability reached its all time low in 2008 under the previous Labour Government".
He said the Government was committed to addressing housing affordability, particularly in Auckland and Christchurch, but did not accept there was a crisis.
"I don't accept that there is a crisis and the duplicity of parties like Labour is exposed when the affordability index was a whole lot worse in 2008 and they rejected any notion of there being a crisis then," he said.
"The Government's solid work programme on housing affordability is based on the comprehensive report of the Productivity Commission and has work underway on all of the five substantive issues from land supply to material costs to the development levies and infrastructure cost, to improving productivity in the building sector, as well as on the significant compliance cost."
The Labour Party's housing spokesman Phil Twyford said Dr Smith was "deluded".
"After five years in Government house prices in Auckland have gone up 13 per cent in last 12 months, thousands of first home buyers are locked out of the housing market by home mortgage lending limits and interest rates are heading north of 8 per cent. I'd call that a crisis."
Mr Twyford said the quarterly report was not an indication that affordability was improving and he was particularly apprehensive about the effect of mortgage lending restrictions.
"What these lending limits are doing are driving first home buyers out of the market, which is going to basically depress levels of home ownership, which is exactly the opposite what the Government should be trying to achieve at the moment."
Median dwelling prices by region in August 2013
Auckland $563,000
Wellington $380,000
Manawatu/Wanganui $241,000
Central Otago Lakes $385,000
Canterbury/Westland $365,000
Otago $235,000
Southland $183,000
New Zealand total $390,000
Source: Real Estate Institute of New Zealand
