Finance Minister Bill English says he does not know what effect the new rules on taxing capital gain on residential properties and new disclosure rules from non-resident buyers will have on the rising Auckland property market.
But Labour says it will do little if anything to curb prices and at the current rate of house inflation, the average Auckland home would crack $1 million in 17 months.
Mr English, who will deliver the Budget on Thursday, says the effect is "a bit unclear".
"To the extent that you've had a high rate of churn pushing up values, then it will have some effect and if it hasn't been a problem, it won't have much effect," he said.
There has been no measure of foreign buyers or speculators although the Reserve Bank estimated new lending to property investors since introducing tighter lending restrictions in October had risen from 35 per cent to 40 per cent.
But Labour housing spokesman Phil Twyford said the new measures were "grudging and panicked" and did little, if anything, to curb house prices. "Auckland's house prices have skyrocketed 63 per cent - up a whopping $313,000 - since National came to office with the average house now costing $809,000 according to Quotable Value," Mr Twyford said.
"The average Auckland home is on track to cost $1 million in 17 months if nothing substantial is done to rein in soaring prices." He called on the Government to ban the sale of residential properties to foreign speculators.
The Government plans two big changes it believes will reduce demand in the Auckland housing market.
It has added a bright line test to the current law on taxing capital gain. Owners who sell a residential property within two years of purchase will now have to include the profit in their income tax return, unless it is the family home, inherited or sold in a relationship split.
But the current law will remain, so if the IRD believes a property sold after two years was bought with the intention of selling it for profit, the profit should be taxed.
It will also require non-resident buyers to have a New Zealand IRD number and NZ bank account and will probably introduce a withholding tax on sales by non-residents within the two-year bright line.
Reaction has varied, with some experts suggesting it will cut the number of houses on the market and push up prices.
Others say the Government's move combined with the Reserve Bank's latest demand for at least a 30 per cent deposit for property investors in Auckland could cause a major slowdown.
But Mr English does not believe there is any danger of house values starting to fall.
Prime Minister John Key said yesterday that a heated housing market in Auckland was not new and house prices had increased faster under the last Labour Government - it doubled - and Labour had not called it a crisis then.