Prime Minister John Key joined Newstalk ZB's Leighton Smith for a full hour this morning, taking questions on various topics including Auckland's house price inflation issue, foreign buyers, and his chances of running for the Auckland mayoralty if he lost his current job.

John Key says it is possible to introduce stamp duty or a land tax and it could be used to target foreign buyers in Auckland's soaring housing market.

But he said they have been tried overseas and they haven't worked because the money keeps pouring in.

Key said the counterfactual is: do people want to see house prices go down?

"What most Aucklanders say to me, what I'd rather is, if they think about it seriously for a while, I'd rather my house price went up, but I'd rather it went up a little more slowly than it is."

He also said other parts of the country want Chinese buyers to help increase the value of their homes.

"So I go around the rest of the country and people say to me, can we have a few of those Chinese buyers in Wellington and other parts of New Zealand because actually we want our house prices to go up."

But Labour isn't buying the Prime Minister's view that Aucklanders want to see house prices rise.

Labour MP Phil Twyford says it was a conventional wisdom in the past that rising house values made people feel happy.

Twyford thinks something has changed.

"People know that the out of control house prices in Auckland mean that their children and grandchildren will never own a home in this town again unless something is done to fix the situation."

Twyford says people know it's fools' gold - unless they cash up and move to another part of the country, it's not real wealth.

Key also maintained that there are positives in the wider economy that offset the negatives from falling dairy prices.

Key said other areas are doing well and there's also been help for exporters via a weaker currency.

"For a lot of small businesses out there, they will be sitting I suspect saying, look at eighty eight cents against the Australian dollar, at sixty five cents against the US, I can compete."

"But at parity with the Aussie, and at the eighty eight cents against the US, I can't."