In the year ending in March, Statistics New Zealand showed building consents were up 16 per cent for residential and 0.7 per cent for non-residential. But this is barely denting demand.
The Real Estate Institute of New Zealand reported a rise of 13 per cent in Auckland's median price, from $637,000 in March 2014 to $720,000 in March 2015.
If more building consents were issued, critical labour shortages would likely mean delays in new construction.
Prime Minister John Key conceded in April that property prices "are going up too rapidly". He said the Government is concentrating on getting first-time home buyers on the property ladder.
Last month, Reserve Bank Governor Graeme Wheeler announced a change in the LVR for property investors who borrow to buy. From October 1 they'll need a 30 per deposit instead of 20 per cent.
On May 17 John Key announced changes to the way investment property will be taxed, and measures will include forcing all buyers of Kiwi real estate to have an IRD number and a local bank account.
In the Budget, the Government spoke about releasing Crown-owned land for housing development in Auckland.
In April, the Government made changes to the KiwiSaver Scheme to allow first-time buyers to access their member tax credits as well as investment returns and employer and member contributions. It's a move that has resulted in people shredding their KiwiSaver accounts in record numbers. ANZ reported more calls to its customer contact centre about accessing their KiwiSaver for a first home withdrawal in the first week of April than it did in the whole month of April last year.
New Zealand Institute of Economic Research principal economist Shamubeel Eaqub, says: "If you're going to have policies to try to cool things, then it has to be at the bulk of the people who are borrowing the money to buy the houses. We know that most of the houses are being bought by people who have many properties - investors, not first home buyers."
There is no indication of anything like a bubble.
Eaqub said the effect of the higher Loan to Value restrictions (LVR) the Reserve Bank of New Zealand (RBNZ) introduced in October 2013 has been to take many first home buyers out of the market. This eliminated some competition for large property investors.
A low supply of land, restrictions on housing density, population growth and increases in bank lending have been leading factors causing the situation. Similar scenarios are playing out in large cities all over the world.
"We don't think a big broad tool like interest rates would be the right one at this point in time," Eaqub says. "We don't have any easy short-term solutions."
The Reserve Bank is saying we are in an unusual economic cycle. Despite a prolonged period of low interest rates, inflation is staying low. Annual inflation for the March quarter was 0.1 per cent, which is well below the target midpoint of 2 per cent. If the Reserve Bank were to raise interest rates, it would likely lower inflation within the following 18 to 24 months.
A rise in interest rates would be particularly hard on new home buyers. It could cause mortgage holders to default on their loans, which could hurt the banks and the wider economy.
Despite the record high prices, Dr Susan Flint-Hartle, senior lecturer at Massey's School of Economics and Finance, is not worried.
"I think the way residential properties are sold now - by auction, is increasing prices more than they normally would by sale by private negotiation. Sellers are now expecting high prices," Flint-Hartle says.
"I personally think the property market is very strong because all the drivers are in place. There is no indication of anything like a bubble in my opinion."
She believes the hurdle for first home buyers is high. People are asking parents for help, living on the outskirts of the city or facing being lifelong renters.
ANZ chief economist Cameron Bagrie doesn't see the Auckland market as a bubble but does see what he calls some "frothing".
"The Auckland market right here and now is obviously strong as an ox. It would worry me if that strength did not dissipate. I expect the market, by hook or by crook, to slow in the next 12 months. But we're talking about going from a gallop to a canter," Bagrie said.
"London and Sydney are ripping along as well, yet we're still going through that process of urbanisation."
Other countries including Dubai, Taiwan and China are facing rising prices. As the big cities become larger and larger, property prices rise.
If house prices rise at 10 per cent while wages grow at only 5 per cent, it's not sustainable.
Bagrie believes that commercial properties, even including dairy land prices, are well overvalued. But overseas buyers still see New Zealand as cheap.
"There is an awful lot of cash turning up from overseas. I'm hearing stories about a huge number of Auckland properties that are simply vacant at the moment."