Prime Minister John Key will not rule out Government intervention to solve Auckland's housing problem after the council scuttled plans for greater density of residential development in the city.

Auckland Council last week voted to withdraw proposed plans for increased density in some suburbs.

The decision complicates the Government's push to rapidly ramp up housing supply in the city, where house prices remain much higher than the rest of the country.

Legislation designed to address the supply issue through the creation of fast-tracked housing areas will lapse in September.


At his weekly press conference this week, Mr Key reiterated Finance Minister's comment that "all options were on the table" in dealing with Auckland's housing issue. He said it was a growing city and needed to build "up and out".

"The brutal reality is that Auckland needs to accommodate a lot more people. So [councillors] are going to have to address those issues. How they do it, I don't know.

"If they can't find a solution, would the Government do something? Well, technically. But I would prefer that the council found a way through its own problems."

The vote against density was partly the result of concerns about democratic process, rather than the proposals themselves, Mr Key said.