A plan to boost the accommodation stock in Wellington is being touted by the city's mayor as the solution to the city's impending housing crisis.

Photo: RNZ / 123RF

The Mayor's Housing Taskforce was set up to tackle an impending housing crisis, in a city short of nearly 4000 homes.

It released its recommendations (PDF, 464KB) today, which include housing homeless people in converted office blocks, abolishing city height limits and increasing suburban density.

Mayor Justin Lester said the capital's population was likely to increase by up to 80,000 people in the next 25 to 30 years, and not enough housing was being built to meet that.

"We need to be building more homes. We currently average around 700 to 800 homes a year - we need to get it up beyond at least 1000."

Salvation Army housing analyst Alan Johnson welcomed the report, but said more was needed.

"I think it really is about money and that's what's a little bit scarce in the report.

"Clearly these things don't happen without budgets and I think then the council needs to just weigh up whether or not it's prepared to fund some of this or whether it just gathers dust on a shelf."

Housing analyst Hugh Pavletich said the capital needed to focus on freeing up land on urban fringes and better funding of infrastructure for new developments.

Mr Lester said the council, iwi and the government could build houses for about $400,000 each, to be sold for not much more than that.

"It's not about the council making money for a start. That's a very important point because where you've got a market where it's privately led and you're responding to whatever price you can get often they'll be sold for $600,000 to $650,000 or even more depending on the location.

"We take a build cost and then we add on whatever the margin might be in order to allow us to build more in the future. But that would be at about 5 or 10 percent and then you sell it at that level."

Mr Lester said anything that reduced house prices from being near 10 times the average household income would be an improvement.

"Affordable historically would be about three to four times the average household income and I think that's a good marker because it's based on what people are earning and what they can afford.

"Unfortunately these days in New Zealand we're closer to about 10 times income and that's simply unaffordable.

"You want to get it down to three or four times [income] - that will be difficult but anything we can [do to] get it down from that 10 times income will be a great improvement."

But the Master Builders Federation has warned that builders might have to import workers if the ambitious steps to fix the housing shortage went ahead quickly.

Policy manager Matthew Aileone warned that the building industry was short of builders and skilled workers, and working at full capacity nationwide.

He said commercial builders often relied on immigration to fill the gap.

But he added the long-term nature of the mayoral report could give the industry greater confidence to undertake more training.

The council will debate the recommendations in August, and if accepted, they will be included in next year's long term plan.