The government's accused of using media spin to avoid the issue of a capital gains tax.

The Reserve Bank has called for action on the overheated housing market, warning New Zealand is at risk of a severe downturn if the housing bubble bursts.

Both Prime Minister John Key and Housing Minister Nick Smith says it's "unclear" what the central bank wants them to do.

The Prime Minister reckons his political opponents have got double standards when it comes to dealing with the housing bubble.

John Key is scathing of Labour Party suggestions that new loan to value ratios targeting property investors be introduced.

"They were in favour of them before the Reserve Bank brought them in, they spent the entire time they were brought in bagging me in parliament for allowing the Reserve Bank to do it and now they're proposing another one, so if you put the hypocrisy to one side maybe those things could all be considered."

Green Party housing spokesperson Kevin Hague says there shouldn't be any confusion.

"The language was unprecedentedly clear that the Reserve Bank believes that it is essential that a capital gain that's made on the sale of investment properties ought to be taxed."

Hague says the government needs to take strong action.

"Yes there are a few other things that we could do...but the root drivers of this crisis to securing in Auckland are ones that only central Government can tackle."