Prime Minister John Key denies the high prices of New Zealand homes reflects a crisis for homeowners, Radio New Zealand reports.
A new report from the OECD rates New Zealand homes as the most overvalued in the developed world relative to rents and income.
The OECD says relative to rents, New Zealand house prices are 70 per cent too high.
Key told Morning Report the findings reflect a strong economy, with home buyers encouraged into the market by economic growth and improving job prospects.
Key says that's not about the change, with further strong growth over the coming years, as forecast in the budget.
Institute of Economic Research principal economist Kirdan Lees said property speculators may be pushing up prices.
But the Property Investors Federation believes tighter lending restrictions and low rents have discouraged many investors.
Labour says the finding is no surprise at all. Party leader David Cunliffe said more houses must be built.
He said a capital gains tax would ensure people who invest in property pay tax like everyone else and controls must also be put on foreign investors who are snapping up homes.
