Supply is on the way as Treasurer Joe Hockey says there is no housing bubble

Treasurer Joe Hockey has dismissed his department's concerns about a housing bubble in Sydney and parts of Melbourne.

He suggests the issue was one of housing supply and market forces would sort it out.

The Treasurer said he saw no need for more regulation above the current high profile role of APRA.

"If there is a concern about elevated house prices, Sydney or parts of Melbourne, then the best way to respond is with increased supply," he said.

Mr Hockey said Wednesday's quarterly national accounts figures had clear evidence of a significant increase in housing supply.

The issue was prompted after Mr Hockey's top economic adviser, Treasury Secretary John Fraser, told a Senate committee this week that house prices in Sydney and parts of Melbourne were "unequivocally" in a bubble.

Treasurer Joe Hockey insists increasing residential construction is the best way to respond to concerns about a housing bubble.

"You've go to get the stock up," he told ABC Radio on Thursday, citing figures showing an 18 per cent increase in the number of construction starts in 2014.

Mr Hockey said the global experience was that bubbles only happened when supply exceeded demand and that was not the case in Australia.

"You have particular troubles in markets where supply exceeds demand - exhibit A, China; exhibit B, Ireland; exhibit C, the US," he told reporters.