Productivity Commission head Murray Sherwin says he welcomes moves to water down Auckland's target of building 75% of new houses within its urban limits in its new 30-year plan.
In its draft report on housing affordability released last December, the commission took Auckland planners to task for initially setting the target too high.
Mr Sherwin says lowering it to 60% to 70% is a good start to tackling the Super City's chronic shortage of cheap housing, but no silver bullet.
"There is no doubt that we can deliver cheaper houses," Mr Sherwin says. "To do so is going to require ... the delivery of some cheaper land".
"We're indifferent as to whether the new properties are developed outside the border or inside, so long as councils are looking at this through an affordable housing lens.
"Not only do some of the councils have those limits on urban sprawl, but they also have some fairly constraining regulations on densification as well".
The Productivity Commission's final report to the Government on housing affordability will be released later this month.