Makhlouf highlighted the elevated levels of national housing debt - at $216 billion, up 26 per cent in five years.
"Nobody should be surprised that Treasury is concerned."
He also highlighted the impact that high house prices were having on Auckland labour supply and the risk that they were starting to have on productivity levels.
"Better productivity is the way to achieve sustainable economic growth and raise living standards. Selling ever higher priced houses to each other isn't."
Well over half of New Zealand's high tech manufacturing jobs were located in Auckland and just under half of the country's "knowledge intensive service jobs", he said.
Inflated Auckland house prices were making it more difficult for the county to attract the skilled workers it needed,
"The Treasury cares about these and other issues in the Auckland housing market because they have impacts for everyone from Cape Reinga to Stewart Island," he said.
While Makhlouf recognised that the Reserve Bank and Government had launched a number of demand side initiatives - including loan-to-value ratios and the bright-line test on tax - he emphasised that Treasury saw lack of supply as the primary issue facing Auckland.
A Unitary Plan that provided "sufficient residential development capacity" was crucial, he said.
He cited three major issues - as identified in last year's Productivity Commission report on housing. These included a slow and prescriptive planning process, infrastructure provision that didn't meet growth demands and a strong focus on local interests and existing homeowners and "a weaker focus on the national interests and the interests of non-homeowners."
"The Treasury recognises that it's a difficult situation the Auckland Council faces. At the same time we are concerned that the impact of NIMBYism (not-in-my backyard) in Auckland affects people elsewhere in the country."
See Gabriel Makhlouf's full speech below:
