Local Government New Zealand says making it cheaper to build a house is not as simple as releasing more land for development, as suggested by the Productivity Commission.
House prices have risen by 180% in real terms since 1990.
One proposal in a draft report by the commission on housing affordability is for Auckland to rethink plans to accommodate 75% of future housing within existing borders.
The commission says more sites should be made available beyond the city's edges.
But Local Government NZ president Laurence Yule says councils also have to factor in the costs for transport and infrastructure.