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 72c an hour increase in the average wage rate and a reduction in the average mortgage interest rate from 5.57 to 5.52 per cent.
Auckland, Wellington, Central Otago/Lakes, Southland and Canterbury/Westland showed improved affordability over the quarter, while affordability declined in Hawkes 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.
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 the 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."