Council inspectors encountering serious problems at some sites.
Shoddy buildings are going up in Auckland as the council struggles with "significant" quality issues including unskilled construction workers without proper supervision.
The warning comes as more land is opened up for development in an effort to take some heat out of the property market.
Auckland consents rose to a near 10-year high to 912 in April, short of the 1000 a month Building and Housing Minister Nick Smith wants.
Ian McCormick, who oversees Auckland Council's building consenting, said his workers were encountering serious problems at some sites.
"We have some significant industry quality issues that we are struggling with as well, as evidenced by [the fact] between 25 and 40 per cent of all building inspections continue to fail," he said, while appearing before a parliamentary select committee.
"There is a real shortage of people working in the industry at the moment in Auckland. What we are seeing is large numbers of relatively unskilled folk coming into the market, often not supervised to the degree they need to be, and that's contributing to some of the quality issues that we are currently seeing."
Because of this, the council was working with the Ministry of Business, Innovation and Employment and the Registered Master Builders Association to develop a voluntary system that would help monitor quality right throughout the building process.
Mr McCormick said his inspectors dealt with cases of non-compliance that came about when very good builders failed to properly supervise subcontractors.
"There is no way with a 25 to 40 per cent failure rate on building inspections that I can put my hand on my heart and say, 'we are picking up every piece of non-compliant work that is actually out there', because I am absolutely certain we are not."
Asked after the meeting about trends in the failure rate, Mr McCormick said it fluctuated but was "getting a little bit worse".
"We have had cases where people have had a simple foundation for a single-storey house, and it has actually failed five inspections."
Dean Kimpton, the council's chief operating officer, said in his view 1000 building consents a month was not currently possible. "You only have a certain number of developers ... it is not just about land supply and ability to process consents."
Dr Smith told the Herald that the doubling of building consents over the past three years brought with it a risk of poor workmanship.
Last month he released new guidance on the standards of work expected in aspects of new home construction. However, Dr Smith said his advice to Auckland Council was that they needed to increase the number of inspectors.
Labour's Housing spokesman Phil Twyford said the Government "sat on its hands" three or four years ago, when they needed to increase polytech enrolments and implement a Government-backed building programme.
Dave Kelly, chief executive of the Master Builders Association, said they were keen to work with the council on the development of a quality assurance system.