Queen Zola Mafu, who is his youngest wife, is sharing a palace.
The KwaZulu Natal government, one of nine provincial administrations, has already budgeted about $6.9m for the royal family this year.
Opposition parties have previously accused the king, his wives and more than 25 children of lavish spending.
King Zwelithini, as leader of South Africa’s largest ethnic group, is an extremely influential traditional leader in the country.
Royal household department chief financial officer, Mduduzi Mthembu, told a parliamentary committee that a further $700,000 was needed to build Queen Mafu’s palace.
The department also wanted $1.4m to upgrade Queen MaMchiza’s palace, he said.
Funding for the accommodation would be spread over three years, Mr Mthembu.
MPs on the committee said they would consider the request later this month.
Queen Mafu made headlines in 2004 when, as a 14-year-old, she first appeared in public with King Zwelithini.
In 2008, opposition parties criticised King Zwelithini’s wives for spending about $24,000 on linen, designer clothes and costly holidays.
The royal palaces are in different parts of Nongoma, a rural area about 300km (185 miles) north of Durban, the main city in KwaZulu Natal.