Prime Minister Bill English says surging emergency housing grant applications does not demonstrate a housing crisis, saying the "strong demand" and "uplift in prices" are "good problems to have".
Speaking to NewsHub's 'The AM Show', Mr English addressed reports of a huge surge in demand for emergency housing.
The emergency needs grant was set up by the government last year in an attempt to combat rising homelessness.
The Ministry for Social Development reportedly briefed Social Housing Minister Amy Adams, saying there has been "high than expected demand" for the grants since they were announced.
Mr English said the grant is flushing out those with a real need for emergency housing.
"The fact is that we've got a fast growing population, everyone knows there's been pressure in the housing market - we're adapting pretty well to that," he told The AM Show.
"This is trying to deal with the real need that may have been hidden before, so it's now coming out but in the longer run, more houses on the ground is what's going to matter and more emergency housing.
"I wouldn't call it a crisis. We have strong demand, we have an uplift in prices - these are good problems to have actually."