Rotorua will need to embrace high-density housing if the city is to avoid a predicted shortfall of 6000 homes over the next decade, experts say.
Their comments come after the introduction of a new Housing Supply Bill, backed by both Labour and National, which would cut development red tape in an effort to speed up the number of new homes being built.
The Bill aims to boost the housing supply in main urban areas Auckland, Hamilton, Tauranga, Wellington and Christchurch by allowing up to three homes of up to three storeys to be built on most sites without the need for resource consent.
Councils in some smaller areas, such as Rotorua, might be required to implement the same density standards if the Government considered there was an acute housing need.
Rotorua Lakes Council district development deputy chief executive Jean-Paul Gaston said the Bill signalled the Government recognised intervention was needed.
"We know we are in a housing crisis. Rotorua has a deficit of more than 1,700 homes right now and, according to population growth estimates, that need will increase to 6,000 homes over the next decade."
Gaston said the Bill would provide an "immediate mechanism" to fast-track intensification ahead of the plan changes the council already had in development.
"We are starting to see the composition of households in Rotorua change. There will be a need for smaller and low-maintenance-type homes in medium to high density."
The changes proposed under the Bill would allow people more choice about where they lived, how landowners used and developed land, and how the community connected with the city's amenities and facilities.
Council officers were carefully reviewing the Bill to determine whether a submission would be beneficial to Rotorua, he said.
"We continue to work towards District Plan changes and other housing-related mahi to enable more homes to be built for our community."
Classic Builders director Peter Cooney said Rotorua had an urgent need for more housing.
He said the city's typical section size was larger, therefore infilling was more feasible and new development rules would probably have more impact than in neighbouring Tauranga.
"Housing affordability has become a critical issue in Rotorua.
"Rotorua is in urgent need of housing, which is evident from the emergency housing situation in place across the city."
The cross-party support for the Bill sent a "powerful message" about housing affordability, he said.
"Resource consents add a lot of time, cost and uncertainty to housing developments - so anything that can be done to minimise that is a good thing."
Higher-density housing was best done comprehensively rather than in a "piecemeal approach".
"This Bill isn't a silver bullet but it will help."
Morgan Jones, managing director of development management company Veros, said there was "absolutely" a need for more housing in Rotorua.
Jones said Rotorua's housing market had experienced considerable price growth and the new rules would make it easier to increase supply.
"The end house should be more affordable than it would have otherwise been."
The housing situation in Rotorua and Tauranga was a "real problem", he said.
"It is creating inequality, it is pricing people out of the market, and the cost of housing is now well out of step with wages."
The Bill would help cut what was "far too much red tape" around the process for small-scale housing developments.
Structure Properties Ltd director Shannon Moyle said implementing the medium-density standards in Rotorua would ensure the city did not end up in Tauranga's position, with a lack of infrastructure and "retrospective city planning".
Moyle said the Bill would bring a framework for growth without layers of "unnecessary red tape" and allow clearer direction for council and developers.
Moyle said the issues with consenting in Tauranga was now affecting the long-term outcomes for "a city with incredible potential" and the Bill was the first step.
Tauranga City Council general manager of strategy and growth, Christine Jones, said the council was reviewing the Bill and considering what it meant for Tauranga's projects.
"With the housing crisis facing Tauranga, we need to look at all the solutions available to help get more houses in the ground.
"But we need any solution to deliver good urban and housing outcomes, and for the city's infrastructure to be able to cope with it."
Jones said it was working with Commissioners to prepare a submission to the Bill, which would be made publicly available.