The biggest single cost of a new average priced house today is dealing with Government and Council. It isn’t the land price nor is it the ever increasing cost of construction. So moving the city limit boundaries out doesn’t mean cheaper housing it means more Council (infrastructure costs). Similarly Government building houses vs the private sector isn’t going to translate to cheaper construction.
Its time Council allowed houses and land to be smaller. There is an entire small house movement going on worldwide and it is ignored in New Zealand because Council bureaucrats have deemed 30m² is too small for an apartment , even though the price point would be under $400,000. Similarly with land subdivision, the average requirement is 300 to 400m² in size. Reducing this footprint to 120m² would still allow a 3 bedroom home to be built at a price point easily under $600,000.
Its time these options were implemented rather than continuing to manipulate borrowing ratios, or worse just reading constant newspaper headlines about affordability.