A $300 million scheme to fast-track 6200 new houses in Auckland's northwest is facing financial challenges and could be canned.

Last year, Auckland Council received $300 million from the Government's $1 billion Housing Infrastructure Fund to build new roads and water infrastructure for 6200 houses at Whenuapai and Redhills.

The $1b fund was spread across five of New Zealand's fastest-growing councils and is expected to speed up work on new houses by up to eight years.

But a report going to Auckland Council's governing body meeting today says rising infrastructure costs and developers not being able to fund their portion means the scheme may not proceed.

Advertisement

"There is uncertainty around the level of risk that council is exposed to through potential escalation in costs for capital projects," says the report.

There are also concerns that unlocking Whenuapai and Redhills for housing could raise expectations to unlock land in the wider area for 13,000 new houses, which the cash-strapped council cannot afford.

This is the second Government scheme to help Auckland's housing crisis that is coming unstuck.

Last month, the Herald reported that a $600m scheme to bring forward 23,300 new houses in the north and south of the city is making little progress.

It involves private investors paying the upfront cost of new transport and water infrastructure which is recouped by charging new residents higher rates and water bills over a 20- to 30-year period.

Today, Auckland councillors will be asked to submit a detailed business case for the $300m scheme before the end of the month.

The report said reaching an agreement to access the money will not require it to proceed with the proposal.

"If further changes to costs undermine the benefits of continuing with the proposal or developers are unwilling to meet their commitment then Auckland Council will have the option not to proceed," it said.