Auckland house prices could fall as thousands more are built over the next three years, New Zealand Prime Minister John Key says.

“It’s not always a one-way bet,” he told reporters on Monday.

“House prices can come off, a hell of a lot are going to be built over the next three years and there will be tens of thousands of new dwellings.”

Auckland Council released its three-yearly valuations on Sunday which showed double-figure rises in nearly all suburbs, some increasing by a whopping 33 per cent.

But Mr Key says the government’s plan to increase supply by making more land available is working.

“I wouldn’t be surprised if the discussion three years from now is about how many are available, there’s a lot of incentive to build,” he said.

Mr Key says the government is aiming for a modest escalation in house prices, without them “galloping away”.

There’s concern some Aucklanders could face higher rates after the valuations, but Mr Key says there’s no need for government subsidies.

Instead, Auckland Council needed to manage its resources appropriately, he said.

“They’ve got to be careful about not just thrashing increases in terms of rates because you’re a bit wealthier today just because, in theory, your house is worth a bit more.”

The council uses the valuations to set ratepayers’ share of the $1.4 billion rate take.

Over 525,000 properties were evaluated and thousands may seek to challenge their valuation if rates rise significantly.

Labour’s acting deputy leader, Annette King, says Auckland’s housing market is a huge problem and the government isn’t fixing it.

“We’ve got 17 special housing areas, we’ve had something like 32 consents and three houses built,” she said.