New Zealand's Treasury secretary Gabriel Makhlouf is rejecting a capital gains tax to reduce demand in the Auckland housing market, saying it's a supply-side problem.

“We need to build more houses to meet the need we’ve got,” he said on TV3’s The Nation programme.

This week Real Estate Institute figures showed Auckland’s median house price jumped 13 per cent to $720,000 during the past year. Excluding Auckland, the national median price increased just 1.4 per cent to $350,000.

Comments by Reserve Bank deputy governor Grant Spencer on the situation were interpreted as a call for a capital gains tax. There is no general capital gains tax in New Zealand, although it can apply to some specific investments.

Mr Makhlouf is sceptical of a wider capital gains tax, saying they exist in the Sydney and London markets where property prices are rising.

“What Grant Spencer was talking about was the need for us to address the housing issues in Auckland. The heart of the housing issue in Auckland is that we are not building enough houses,” Mr Makhlouf says.

Changing planning regulations was the single biggest thing that would make a difference, he said.