The Government's close to taking control of special housing areas where no progress has been made with local councils under housing accords.

John Key says of the 104 special housing areas established, 90 are starting work but 14 aren't progressing.

"They'll probably find in the next few days they'll be getting a letter from Nick Smith to say that if they don't progress and bring those special housing areas onto the market, then the special housing designation will be taken off them."

Labour's housing spokesperson Phil Twyford says the government is in denial about the city becoming a speculator's paradise, with developers holding on to land to watch it ratchet up in value.

"Their attempts to increase the supply of housing and somehow suggest that help is on the way, it could not be further from the truth."

The Prime Minister's also being accused of thinking like a currency trader while trying to deal with the Auckland housing crisis.

Key says there hasn't been a major housing correction in the last 45 years, so while prices are going up steeply, increasing housing supply should sort it out.

But Phil Twyford says believing in the power of the market to correct itself isn't working.

"We have one of the most overvalued housing markets in the world on almost every indicator.

"The Auckland housing market is in deep, deep trouble."