New Housing Minister Phil Twyford wants to scrap Auckland's regulated urban boundary to let the city spread.

He told Lisa Owen on TV3's The Nation today that solving Auckland's housing crisis will require "fixing" both the system of financing new infrastructure and the rural/urban boundary fixed in the current Auckland Plan.

"Given the shortfall of housing in Auckland and the population and growth projections, this city is going to have to go up and out," he said.

"We want to build most of the development we can in the city around the transport network. We want to do density well and build great urban communities for people to live, work and play, so as far as I'm concerned it's got to be up and out.

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"On the question of the Metropolitan Urban Limit, we are going to build affordable houses, we are going to tax speculators, we are going to do all those things.

"But if we want a lasting solution to this problem, we have to make reforms that will allow the market to deliver better outcomes on its own, and the two really big things that we have to fix are the broken system of financing infrastructure that stops the city from growing, and the highly restrictive planning rules like the urban growth boundary.

"But you can't fix the urban growth boundary without fixing the financing issue."

Twyford said he was working "as a matter of priority" on developing infrastructure bonds to finance new roads, water and sewerage. He has said previously that the bonds could be issued by a central Government agency and repaid over 50 years by targeted rates on properties in new developments served by the infrastructure.

He has also said that the regulated rural/urban boundary "has created an artificial scarcity of land. It is an open invitation to land bankers to speculate on rising prices".

Phil Twyford expects to build 16,000
Phil Twyford expects to build 16,000 "affordable" homes in the next three years. Photo / File

He reiterated that the Government intends to ramp up gradually to its target of building 10,000 "affordable" homes a year for the next 10 years, and confirmed that "affordable" meant a price of $600,000 for a freestanding terrace home in Auckland.

"In the first three years we'll probably deliver about 16,000 homes. In the third year we'll hit the average of 10,000 a year," he told Owen.

He said the new houses would be delivered in three ways.

First, the Government would look at existing private housing projects and offer to buy affordable homes "off the plans" to make it easier for private developers to secure finance.

Second, it would require 30 to 40 per cent of new homes in any development on Crown land to be for sale at affordable prices, in addition to an unspecified proportion for state housing, with the rest available for sale to the general market.

Third: "We have an ambitious plan to do 10 to 15 large-scale urban developments projects around Auckland, particularly around the rail network."

Some of these, such as a new city suggested near Pukekohe, will be outside the existing urban boundary.

Twyford, who is also Transport Minister, said the Government would legislate to allow Auckland Council to impose a regional fuel tax expected to raise $1.5 billion over 10 years towards closing a $6 billion "hole" in the city's 10-year infrastructure budget.

But he said the fuel tax was only a short-term solution until some kind of congestion charging can be introduced on the city's roads "I think in the next five to 10 years".

He expects to receive a report on detailed congestion charging options shortly.