Rotorua is proving to be a great place to live and raise a family but MP Todd McClay says more houses will need to be built to keep up with the city's growing population.
"With the local economy growing, we continue to attract investment and more jobs are being created. People are choosing Rotorua as a home and moving with their families to escape from challenges of Auckland, Tauranga and surrounding areas," Mr McClay said.
"Many former residents are also returning from overseas and as the New Zealand economy out-performs Australia's Kiwis are returning in increasing numbers."
Mr McClay said as more people moved to Rotorua many of the city's school rolls were growing and land needed to be freed up and more houses needed to be built to keep up with growing demand.
Statistics showed residential building consents in Rotorua had been slowing down over the past six years, but Mr McClay said there was still potential for more growth in Rotorua.
In 2011, 115 residential consents were issued, which dropped to 84 in 2012 and 78 each in 2013 and 2014.
Last year saw a slight increase, with 93 consents and in the four months from January to April this year 39 consents have been issued for residential buildings in Rotorua.
"The current housing supply is probably not sufficient for the city's growth. While it wasn't an issue previously, the current performance of our economy means that land needs to be freed up so more houses can be built to keep up with this increased growth," Mr McClay said.
The Rotorua Lakes Council has done a good job in working with local business and attracting investment into city, he said.
"We continue to see Government invest in infrastructure to make us an attractive destination. We are now seeing increased demand for rental accommodation and home ownership and the solution to this increased demand is to quickly build more houses.
"Builders and developers are telling me there is a high demand for new houses but there is not enough land which is open for development.
"We need to be pro-active and act on this now. Rotorua is likely to remain a place that many more people will want to bring their families to live. This is a good problem to have if we are proactive. We need to identify suitable land and quickly make it available to local developers and new home owners," Mr McClay said.
"There is the potential to build hundreds more houses over the next few years which will support local business, create apprenticeships for local school leavers and help house local people."
Mr McClay said he would be working with the council as well as developers and builders to identify potential areas suitable for residential development.
"More development would lead to more growth in the city, creating more jobs and further driving the local economy."
Rotorua mayor Steve Chadwick agreed unlocking land for both residential and commercial development was a growing priority for Rotorua.
"We're seeing increasing levels of growth and development in the local economy, high levels of business confidence and increasing interest in Rotorua from outside the district with some population growth.
"So we're aware of the pressures and we need to make good decisions around land use," she said.
"We've got high demand for quality rental properties and we need new builds to encourage home ownership and investment in key industries.
"There is activity happening now in terms of new developments but there is a need for more - it is a challenge and it's one council has committed to working on alongside central government and its agencies, to find solutions and ensure that we also have the infrastructure to support growth and additional housing stock and commercial development.
"As a council we've now have an operative District Plan but it's time to start again and we will be looking at what further potential there is for more residential and commercial development."
Latest council consenting figures show there have been 57 consents issued for new dwellings so far this year. For all of last year the total was 77.