Pokeno, Tuakau and even Huntly are attracting buyers south of the Bombay hills and there is talk of reviving an Auckland-Hamilton rail service. The council has already allowed for up to 40 per cent of new housing outside the city limits.
It needs to pursue as many well-planned, higher-density developments there as possible to catch up with demand. Higher-density housing in existing suburbs is the long-term answer, but that will not provide homes fast enough to fix the problem.
2. Sort out roads and water
Slow infrastructure is one of the biggest obstacles to new housing. Deputy Prime Minister Bill English says councils don't plan well enough for growth in their water and roading decisions, making it hard for developers to open new subdivisions with confidence.
The council's own chief economist, Chris Parker, agrees. "We've got to unlock private sector capital into infrastructure," he told the Herald. "We do that with our electricity distribution and telecoms and gas. We've got to do it more with our roads and with our three waters - drinking, waste and stormwater."
Parker suggests allowing private companies to provide water supply and build roads. One option, popular in the US state of Texas, is raising the money through municipal bonds, instead of the current developer levies, which add a big upfront cost to new houses.
Developers would sell bonds to investors through a specially created municipal authority and pay back the money with interest through local taxes levied on the home owners - still a cost but spread over several years.
3. Try again on the "compact city"
The council's vision (effectively more townhouses, terraced houses and apartments for higher density living) suffered a big PR setback in November when the Herald revealed councillors had secretly switched another 20,000 properties into a proposed medium density zone, with no right of reply for affected home owners.
Intensification supporters such as Generation Zero rightly argued that the backlash and subsequent council backdown showed the disproportionate power of the city's older property owners against less wealthy, younger renters.
But the council still needs to find a way to sweeten the prospect of three-storey apartments across the city. As councillor Sir John Walker put it: "They might not be very high, but I wouldn't want to live next door to one."
4. Strengthen the building industry
Imagine buying all your groceries from the local dairy, instead of a supermarket. That's roughly the state of the New Zealand building industry - too many one-man operators who don't have sufficient building knowledge or economies of scale to tackle the three-storey apartments we need.
Individual builders also lack bargaining power with building product suppliers, which may explain why the Productivity Commission found in 2012 that New Zealand prices for 10 common items were 55 per cent more expensive than in Australia.
The biggest obstacle is consumer resistance, as mass-produced homes from a factory still have an image problem. But if we got enough big projects off the ground (Labour's KiwiBuild plan to build 100,000 homes over 10 years is one option) larger firms could start producing cheaper homes on a grand scale.
5. Build smaller houses
Almost 70 per cent of new demand for housing comes from one and two-bedroom households, yet more than 70 per cent of new homes have more than four bedrooms. The mismatch happens because builders unable to take on more complex projects want to maximise their profit on a single house and current planning rules don't encourage them to do otherwise.
It's also creating a bottleneck which prevents older couples wanting to downsize from selling to younger couples looking for a family home. "Most empty nesters don't want to go and live in an apartment in town with a bunch of students, where your kitchen also happens to be half of your hallway," blogged estate agent Andrew Duncan.
"It seems like every new apartment building popping up is either designed for uni students, or the uber-rich. There is no middle ground anymore. Nothing that would suit my parents, anyway."
6. A fair tax on all property speculators
Property speculation has been rampant in Auckland for the last few years but it's not only rich Chinese buyers who are to blame. So why is John Key signalling a possible land tax of up to 10 per cent, which would apply only to foreign investors?
He must suspect the initial figures on house purchases by foreign buyers will look bad enough to provoke more calls for action. Yet the Government will not contemplate a land tax on all property owners, because it would hurt many of its potential supporters and could actually push house prices down.
Some form of broad-based, low level tax on land or capital gains is the only fair way to combat property speculation, tax property in the same way as other investments and address the rapidly growing wealth gap between renters and property owners. In the meantime the Government could still abolish negative gearing, which allows investors to offset rental losses against their other taxable income.
7. Reconsider immigration
Record immigration is definitely affecting house prices - 67,600 people arrived in the year to March (including returning New Zealanders) and new residents bought one in three houses sold last year.
But as Key acknowledges, a tax on foreigners would not address this. And it probably wouldn't work, as overseas buyers would channel purchases through a local agent. Labour's plan to ban foreigners from buying existing houses faces the same problem.
The harder but more relevant question for politicians is whether we are getting the right mix of immigrants - does the economic contribution of our current intake outweigh the extra costs, such as rising house prices?
8. Restrict bank lending
A massive increase in bank credit has fuelled the long-term rise in house prices since the early 1990s. Since 1984 loans for manufacturing and commerce have shrunk from 40 per cent to 9 per cent of all bank lending, while apparently risk-free mortgages have climbed from 14 per cent to 52 per cent, helping banks to make record profits from the housing boom.
Banks no longer limit borrowers' mortgage payments to 30 per cent of gross income and until recently lent with no deposit, which pushes up prices. Recent arrivals from the UK are stunned at the willingness of New Zealand banks to lend eye-wateringly large sums of money to borrowers, who spend more than half their disposable incomes on their mortgage.
The introduction of loan to value ratio (LVR) restrictions, which require 20 per cent deposits for buyers in Auckland (30 per cent for investors), have barely dented this trend. The Reserve Bank may need to consider further tweaks to LVRs to rein in Auckland's double-digit house price inflation or even require banks to hold higher reserves against their lending.
9. Lend a helping hand
Most of these changes take time but thousands of would-be first home buyers need help now. One possibility is a gradual extension of shared equity housing, which allows people on low incomes to buy a share of a house (say 75 per cent), with the balance paid by another organisation.
The household can either buy the organisation out over time or sell their share to the organisation or on the open market. The best-known local example is the NZ Housing Foundation, but they are struggling to keep up with growing demand for their services.
Fletcher Building boss Steve Evans is keen for business and government to get involved, as in London, so more skilled workers can afford to live in Auckland. There are fishhooks to this approach - speculators have sold houses for a quick profit and any such schemes risk inflating prices further. But for a large number of households in the $60,000 to $90,000 income bracket, it's now hard to get into a house in Auckland any other way.
10. Prepare for compromise
We need to acknowledge that the housing affordability crisis has created a deep social divide, between the "haves" who own property and the "have nots", who don't own a house and believe they never will.
Some home owners, who have seen their property wealth increase enormously, believe there is no crisis - and politicians know that home owners vote more than renters. So any solutions are likely to involve some uncomfortable trade-offs, particularly for those who have benefited most from rising house prices.
As business editor at large Liam Dann pointed out this week, this will require political leadership but also a clear signal from Kiwis - especially Aucklanders - that they are prepared to make compromises to ensure most people can again afford to buy their own home.
