The prime minister is refusing to say if she would like to see house prices fall on the back of changes designed to make homes more affordable.
Yesterday the government announced a raft of new measures designed to "tilt the balance" toward first-home buyers.
They include increasing the caps for financial support and extending the bright-line test to 10 years.
Under the bright-line test, tax will need to be paid for the sale of a residential property owned for less than 10 years, unless that property was used as the owner's residence.
"We want to incentivise those who may be looking to become investors in the market to think about how they can contribute to growing the number of houses we have in New Zealand because that's our core problem," Ardern told Morning Report.
She stressed that the new changes did not apply to the family home.
"Capital gains tax in the form that we've debated it over many years has always been comprehensive applying to things like small businesses and so on. This is literally applying to those only who have multiple homes, more than a family home and who is selling it within a 10-year period."
She refused to call the extension of the bright-line test from five years to 10 a capital gains tax.
"We have simply extended the period for which it applies and the reason we've done that is ... because it wasn't meeting the reality of the behaviour we were seeing in the market."
She said 10 years would catch the speculative behaviour.
Treasury however advised the government to extend it to 20 years.
"There will always be a role for investors in our housing market, people renting. What we want is stability for those renters to take in combination the changes to the Residential Tenancies Act to try and give them more stability."
She said the government also was encouraging investors to not to flip their houses when the market was hot but to keep their tenants in there.
"We have a housing shortage in New Zealand. Nothing that we've done here takes houses out of existence but what it might do ... we hope it will do, is bring more stability to house prices and with the exemptions we have built in which create clear advantages for those who are going to invest in new builds."
She said data showed the real growth area had been the proportion of investors in the market.
"One of the issues we've seen is a proportion of houses that have been picked up by investors in the market has increased. We want first-home buyers in the market."
However, first-home buyers say new caps don't do much to help their cause.
Under the new measures, from 1 April the income caps for the First Home Loan and the house price caps under the First Home Grants scheme will increase.
Under the First Home Loan scheme, borrowers can get a home loan with just a 5 percent deposit if they earn under $95,000 a year for one person, or under $150,000 for two or more people buying together. These loans are underwritten by Kāinga Ora and can be obtained with participating lenders.
The First Home Grants scheme gives first-home buyers a lump-sum payment from the government, up to $5000 for existing properties, or up to $10,000 for new properties.
With the increase to the house caps, the most a property can cost to be eligible for the scheme is in Auckland - a new property up to $700,000, although an existing property must not be more than $625,000.
Ardern said the caps were based on sales.
"They are actually based on March data. So they are based on sales from CoreLogic up to March, they take the lowest quartile and they take the median so that's how it's calculated."
She explained the caps were low so people didn't take out mortgages larger than what they could afford.
Finance Minister Grant Robertson said the aim of the measures is more sustainable house prices and giving first-home buyers a fair go.
He said the policy is aimed at people getting in to starter homes.
"What we also have to look at though, is people's ability to service a mortgage so you could put the cap up at $1 million but then the people going into that property would be at risk of potentially not being able to service a mortgage at that level."
Some economists are predicting prices could fall as much as 10 percent due to the removal of a tax loophole used by investors, and the extension of the time they need to hold on to homes, to avoid a tax on their capital gain.
Ardern would not be drawn on whether she would like to see prices fall.
But she noted a 10 percent decrease would take New Zealand back to where prices were just four months ago, 20 would take it back to February last year.
She said "we'll see" if house prices fall as a consequence of the new measures.
"We need to see an end to that incredibly high house price growth.
"I'm not going to predict what will happen in the market."
The finance minister said in the middle of 2020 house prices were expected to drop, not rise as they have.
"Part of our package of how we address the housing crisis has to be how do we dampen down demand, along with how we increase supply," Robertson said.
"What we told New Zealanders was that we would address the housing crisis, the shape of that looks different than it did in September last year and we've acted in accordance with that."
Meanwhile, a tax expert says rents will go up because of the government's planned changes to tax deduction rules.
Former Inland Revenue deputy commissioner Robin Oliver told Morning Report he was especially unhappy with plans to stop property investors from claiming mortgage interest as a tax deduction.
"It will make housing less affordable for people renting," he said.
"We've got an income tax and this is calculating your profits but ignoring your expenses, no one looks at their accounts and thinks they've got profits because they've simply got cashflow coming in, you have to take into account expenses. This ignores expenses."
If someone has a small profit or loss, they will still pay take on fictitious income, Oliver said.
It's likely people with rental investment properties will simply sell them, he said.
"There will be less rentals around."
Essentially the supply will go down but demand will increase, he said.
Auckland investor and developer David Whitburn said being able to claim back as much tax is a cost that will have to be passed on to tenants.
He said investors relying on rental incomes in their retirement are being unfairly penalised.
'Labour cannot be trusted on taxes' - Collins
The Opposition leader says the housing announcement will punish renters and family-homeowners.
Judith Collins told Morning Report that the housing announcement was a broken promise of a staggering degree.
Collins said the impact of the new housing policies would mean the costs on landlords would be passed onto tenants.
She said the government also failed to address the supply of housing stock.
The National Party supported the policy of more funding for infrastructure but there were no details, she said.
The measures announced yesterday include a $3.8 billion fund to accelerate housing supply in the short to medium term.
"We like the apprenticeship boost scheme that is being extended," Collins said.
She laid National's plan to help first-home buyers.
"You increase supply. We bring in emergency powers to mass consent housing. I've written to the prime minister about this I've offered our assistance because were did it after Christchurch. You build houses.
"They've had four years to get this done, this offer has been out there, we've told them what to do and ... what's going to happen, it's the renters who are going to end up paying for this. That's unfair because landlords will have to put those costs on."
She said National introduced the bright-line test of two years to stop property speculators from flipping houses within months.
"This is a full-on capital gains tax for anyone who owns investment property for less than 10 years but also it removing the interest from the costs from being able to be tax-deductible - that is not a loophole that has a cost of business. And yet those same landlords are having to pay tax on the rental income so it is simply unfair, but rentals will go up in cost.
"Labour simply cannot be trusted on taxes and this is just another example."
If elected next term, she said National would bring the bright-line test back to two years.