Imposing a land tax on foreigners is "one of the tools in the toolbox" but the New Zealand government still believes increasing supply is the best way to deal with the Auckland market, Prime Minister John Key says.

“It’s not something we’re thinking is imminent,” he told reporters.

“The government has been saying for a long time there are options available when it comes to the housing market.”

Mr Key says if new data on foreign buyers shows a large amount of purchases are being made by people with no connection to New Zealand, a land tax would be the best option.

But his gut feeling is that residents and citizens are buying homes for themselves in Auckland.

“There will be a degree of speculation, but they may be fifth-generation New Zealanders,” he said.

“My main point is that options are available, the question is whether we want to take those options today and what the impact would be.

“If we can fix the issue through supply, and overall I believe we can, then along the way we create a bigger city and a lot of jobs.”

The opposition Labour party on Tuesday suggested the New Zealand government should follow Australia’s lead and stop foreign investors buying existing houses.

NZ Labour housing spokesman Phil Twyford said Australia requires foreign property investors to build new houses.

Mr Twyford thinks that would be more effective than “some complicated land tax idea”.

The scale of foreign buying in Auckland isn’t known, but it soon will be.

Since October 1 last year foreign buyers have had to supply their tax number, effectively registering with New Zealand Inland Revenue.

Information on the first six months is expected to be released in two or three weeks.

Mr Key says he hasn’t seen it and will take a good look at it.

“If it shows mostly residents and citizens are buying houses, and a land tax wouldn’t apply to them, there wouldn’t be much point imposing it.”

Labour, the Greens and NZ First are urging the government to act now against foreign speculators.

They believe foreign investors are already having a serious impact on house prices.

Labour suspects the government knows what the figures will show, and that’s why Mr Key has changed his stance.