An ageing population and lower overall salaries in the city have contributed to Tauranga's place as New Zealand's most unaffordable city, the mayor says.
Survey results released yesterday show the city has taken over Auckland as the country's least affordable city for housing.
Tauranga plans to open up new sites of land and increase housing density to address its impending housing crisis.
Mayor Greg Brownless told Morning Report Tauranga's demographics played a part too.
"We're deemed as being less affordable because a lot of our residents are retired and those that work perhaps don't attract the same salaries as in the big cities."
He said housing developers and property speculators were also part of the problem.
"The price of sections and what council's do is only one part of the whole equation. There's people speculating on houses, that drives the price up and there are people deciding they're going to make a vast sum of money from increases in land value, so there's a whole range of factors.
"The horse has bolted a bit on foreign buyers but I think it's a good thing [the ban on foreign buyers]. In other countries you can't just go and buy houses because it distorts the market but a lot of that's happened already."
He said infrastructure funding from the government would help.
"And [the government] taking over the responsibility for funding a lot of the infrastructure that goes in the ground would be a good thing, then they can take the risk, especially if things suddenly slow down," he said.
"If we could pump out 2000 or 3000 houses that would make quite a dent. I think we're doing about 1400 to 1500 houses a year at the moment. But of course the more houses that are built the more people come as well."
He said an average three-bedroom property in Tauranga could range between $500,000 and $600,000.