"What's required to get on top of the Auckland housing market is to address the supply shortages and that's why these residential permit numbers are so important, to see what the trend is there."
Latest Statistics NZ data also showed 1116 consents issued in Auckland in July alone, up 267 consents in a month.
Read more: Building consents hit 10-year high
Wheeler said Auckland demand for new housing was extremely strong.
"I think the existing housing shortage - according to some of the council figures - is somewhere between 15,000 and 25,000 houses and the Auckland Council said they need basically about 10,000 houses a year over the next three decades.
"Permits are currently running at 8500. Part of the challenge is that migration flows are very strong," Wheeler said, citing 55,000 annual arrivals and about half of those people were coming to Auckland and the occupancy rate is about three per house.
"So that means - just dealing with the migration flows - you need about another 8000 houses a year or more, just to deal with the migration.
"What's worrying is if you look at the house price to income ratio in Auckland, it's around nine.
"For the rest of the country, it's four and a half. A ratio of nine puts Auckland house prices in a grouping of cities which are probably the most expensive cities in the world.
"Secondly, if you look at investors' expectations for Auckland, there was a survey by ANZ late last year which indicated that over the next five years, investors were expecting house prices to rise by about 12 per cent a year, so cumulatively about a 75 per cent increase.
"House prices in Auckland are increasing rapidly and becoming more unsustainable. Residential construction is increasing in Auckland but it take some time to correct the imbalances," Wheeler said.
He was then asked when the market might turn, given lower sales price data out lately.
"Little bit early to say whether it's cooling down. What's required to get on top of the Auckland housing market is to address the supply shortages and that's why these residential permit numbers are so important, to see what the trend has been.
"We've always said that macro prudential policy can really help to try to try and slow the rate of increase but it can't solve the Auckland housing problem, not by any means."
Following the Reserve Bank's announcement, Kiwibank, ANZ and Westpac all matched the 0.25 per cent cut, reducing floating mortgage rates a quarter of a percent in a "competitive" home loan market.
See Video - Business editor Liam Dann and senior journalist Jamie Gray on the implications of today's Reserve Bank move:
Governor Graeme Wheeler cut rates to 2.75 percent as expected and said further easing seems likely but also telegraphed a rebound in tradables inflation because of the weak kiwi dollar and a pickup in crude oil prices.
State-owned Kiwibank reducing its floating rate to 5.9 per cent, from 6.15 per cent, ANZ lowered its floating rate to 5.99 per cent, while its flexible home loan decreased to 6.1 per cent.
Westpac lowered its floating mortgage rate to 6 per cent, which it said reflected to "competitive" home loan market.
"With record low interest rates across the market those looking for a home loan have competitive options on fixing for security, floating for flexibility or a mix of both," Westpac said in a statement.
Auckland's booming housing market, where demand from record migration has outstripped supply, has been a point of concern for Wheeler, as accelerating prices in the country's largest city may affect financial stability.
The central bank has introduced lending restrictions in order to combat any overheating in the real estate market.
House prices in Auckland "continue to increase rapidly and are becoming more unsustainable," Wheeler said. It "will take some time" before a rise in residential construction in the country's biggest city is able to correct the imbalance, he said.
- Additional reporting: BusinessDesk
