Falling house prices would be good "for some people", said Prime Minister Bill English, but prices weren't his focus.
Speaking to The Nation, he said it was up to the market to decide prices, which in Auckland average more than $1 million.
Host Lisa Owen asked the Prime Minister if it would be good to see houses become more affordable.
"For some people it would be, no doubt about that. And it can happen - in Christchurch we've seen flat to falling house prices because so many houses are being built. It's now become a very attractive city for moderately priced housing."
With interest rates at record lows, he said it was no more difficult to service a mortgage than it used to be; it's just harder to get on the ladder.
"What we're focusing on is not so much what the price actually is; it's on getting more houses on the ground because we see the demand. That demand is the product of a strong economy, rising incomes and people wanting to live here."
A Treasury document released earlier this month suggested New Zealand was 60,000 houses short, with Auckland needing 35,000 of those. The city's Unitary Plan puts the shortage at 40,000.
"We're not using any particular figure. It's a bit artificial," said Mr English.
"Regardless of how big you might thing the shortage might be, the answer is always the same - that is, get more houses on the ground, faster."
He declined to make his own estimate, saying it was down to councils to make those determinations and implement policies to fix it.
"The answer's always the same. It doesn't matter if one estimates twice the other. In the end, we don't control the decisions. No house can happen anywhere unless the council makes a series of quite complex decisions, ranging from subdivision or intensification to signing off the confirmation it's been built properly."
As for whether the Government would consider extending the current two-year bright line test or putting pressure on the Reserve Bank to introduce tighter loan-to-value restrictions, he said Kiwis will have to "wait and see".
"It depends a bit on how the situation unfolds."
If National wins this year's election, Mr English said it would look at completely revamping the existing planning system to make it easier for developments to get off the ground.
"There's no one new idea that suddenly makes houses appear on subdivisions. It's a long, complex process."
The average price of a home in Auckland according to Quotable Value is just over $1 million, up 72 percent in just four years.