The government is disputing the Reserve Bank's prediction that its Kiwibuild programme will lead to a significant drop in the number of homes being built in the private sector.
The government plans to build 100,000 affordable houses over the next 10 years with half of them in Auckland, but the Reserve Bank says it believes the programme will take many workers away from the private sector.
It has calculated that half the proposed increase in homes would be offset by a fall in private construction.
However, Housing and Urban Development Minister Phil Twyford said the Reserve Bank's estimate was based on Treasury data.
He said he was now discussing Kiwibuild with Treasury and was confident they would soon be on the same page.
"And that is that the overwhelming effect of the Kiwibuild plan will be to deliver new houses - over and above what the private market is delivering.
"Now, the housing market's a complex thing and there may be some offset but I doubt it will amount to very much."
Mr Twyford said Kiwibuild would deliver the homes the private sector was not.
Photo: RNZ / Claire Eastham-Farrelly
"There's a massive unmet demand for affordable housing. There's no shortage of $2 million waterfront homes but there's a dire shortage of modest and affordable homes that young families can buy and live in and that's the gap that we've got to fill."
National housing spokesperson Michael Woodhouse said the new government was conning the public.
"The Reserve Bank's working assumption is that Kiwibuild's 100,000 properties is only going to be 50,000 properties."
Mr Woodhouse said the government would also buy homes that were already under construction and count them toward its Kiwibuild total.
"I think that's mischievous, I think its misleading to the New Zealand public and it's certainly not what they told them before the election."
ACT Party leader David Seymour questioned why Kiwibuild was even necessary.
"If the government has the ability to free up the supply of land, properly fund infrastructure and get more skilled labour into the country then why not do that for the private sector as well?" he said.
"If you can solve the real supply constraints then you don't need a government home building programme."
During Question Time in Parliament yesterday, National Party leader Bill English pushed acting Prime Minister Kelvin Davis on the details of Kiwibuild.
"In the statements made by the government does the word 'build' mean build, or does it mean buy?" Mr English asked.
"It means build," Mr David replied. Mr English pressed on.
"Will the Prime Minister then correct the Minister of Housing, who has said publicly that one of the ways they will achieve 100,000 houses is not to build some of those houses, but to buy off the plan units in high-rise CBD apartment blocks already planned, or to buy houses already under way being built at Hobsonville Point and other places?"
Mr David replied that off-the-plan houses had not been built. Mr Twyford said Mr English had got it wrong.
"In all cases we are going to be building houses. That's a figment of the leader of the opposition's fevered imagination."
Mr Twyford said the government will buy homes off the plans in new private developments such as apartment complexes.
He said this would give developers access to secure capital, making the project less risky and speeding up the delivery of affordable homes.