Labor "wants your house to be worth less" the Prime Minister Tony Abbott has told the Parliament after he was asked to respond to Treasury concerns about a developing housing bubble in Sydney and parts of Melbourne.
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And Treasurer Joe Hockey has backed earlier statements by Mr Abbott welcoming increasing housing prices in major Australian cities.
The opposition repeatedly called on the Prime Minister in question time on Tuesday to respond to warnings from Treasury Secretary John Fraser about "unequivocal" signs of a housing bubble in Sydney and Melbourne.
On Monday, Mr Abbott when asked about the warning during question time, said as a Sydney homeowner he hopes "our housing prices are increasing".
Mr Abbott on Tuesday declined to back away from his comments, saying the last thing millions of Australians wanted to see was a decline in the value of their most important asset.
"Why members opposite should be saying that somehow people's houses are worth too much, that's what the Leader of the Opposition is saying, he is saying that people's houses are worth too much," Mr Abbott said.
"The Leader of the Opposition wants your house to be worth less."
Mr Fraser told a Senate estimates hearing on Monday he feared low interest rates were "encouraging people to perhaps over-invest in housing".
He pointed to the proliferation of television home renovation shows, saying they are a sign of the way in which low interest rates are affecting Australia's culture.
In a statement on Tuesday after the Reserve Bank decided to leave interest rates on hold, Governor Glenn Stevens said housing prices continued to rise strongly in Sydney, "though trends have been more varied in a number of other cities."
In question time, Mr Hockey repeated the Prime Minister's remarks that rising house prices were a good thing.
"I think we should be welcoming an increase in housing values. You know what? For anyone who has a loan out there, they would be wishing their home is worth more than their loan," he said.
Mr Hockey told the Parliament that housing prices and housing affordability were two different issues.
"And we have been concerned about the challenges associated with housing affordability," he said.
He said Victorian Treasurer Tim Pallas was leading a taskforce on behalf of all treasurers to examine ways the government could improve housing affordability.
"Secondly, the second issue to address, rising house prices and less affordability at the same time is to increase the supply of housing," Mr Hockey said.
"We have a shortage of supply. We have a shortage of supply which is also contributing to rising house prices.
