Avondale and Mt Roskill are likely to be the sites of the next major Government-run housing developments in Auckland, Prime Minister Bill English revealed today.

The Government is planning to take advantage of looser rules around density in Auckland to build tens of thousands of new houses on existing Housing New Zealand sites.

The first development was announced in September and will see 300 state houses in Northcote replaced by between 1000 and 1200 homes, 400 of which will be earmarked for social housing and the rest sold on the private market.

Speaking at his weekly press conference today, English let slip that Avondale and Mt Roskill could be next in line for building programmes.

"There's plenty of scope there for medium density housing, also out in South Auckland," he said.

The state housing developments in these suburbs were very low-density, he said, meaning they had capacity for many more homes.

There was no definite location or start date for developments in Avondale and Mt Roskill, English said. It could depend on how fast the council could act, community response to any proposals, and whether there was infrastructure to support any growth in population.

At present, the Government owns 27,000 houses in Auckland. It has capacity to redevelop this housing stock into 69,000 homes following changes in the Unitary Plan last year which allowed for greater density in many suburbs.

An appeal by lobby groups against more intense development in Auckland failed in the High Court today.

Foreign construction companies and labour were likely to be required for the new developments, English said. Some overseas companies had already expressed an interest because of the scale of the building projects.

"We welcome them," English said. "We welcome the expertise, we welcome the people, because we need to get more of this done."

The Government signalled late last year that it would take a more hands-on role in the housing market, as shortages pushed the average price of a home in the city past $1 million.

English said he believed the nationwide housing shortage was now between 10,000 and 20,000 houses.

That contrasted with a claim by Labour this morning that the shortage was 60,000 houses and growing by 4000 houses each quarter.

Labour's figure was based on an estimate by ANZ, but the bank has since distanced itself from that figure.

Labour's policy is to build 10,000 affordable homes every year for 10 years and sell them to first home-buyers.

- NZ Herald