Auckland's Deputy Mayor has criticised the Productivity Commission's report into housing affordability saying it fails to understand how modern cities develop.

"The commission fails to come up with solutions to deal with the cost of building materials, the favourable tax treatment housing receives or take into account the ongoing costs of living in a vast sprawling city," says Cr Penny Hulse.

"It dismisses the added expense to Auckland from having to provide infrastructure over a greater area or the impact to the homeowner from increased travel costs because of having to live further and further from major infrastructure.

"The Productivity Commission has ignored advice provided to them on these issues by the Auckland Council. They have clearly not read the Auckland Plan and as a result, the findings are ideological nonsense.

"What the Auckland Plan actually plans for is 160,000 houses to be built outside the current urban limit. That is a city outside the existing boundaries bigger than Hamilton, Dunedin, Palmerston North and Hastings combined. How can anyone think that is not large enough.

"Aucklanders have told us they don't want their city sprawling from Northland to Hamilton and we are looking at realistic solutions, supported by the Property Council, to develop 280,000 new dwellings within the existing urban boundaries.

"There is ample room to redevelop land that gives people the chance to live near to employment, educational or lifestyle opportunities. It is that demand, along with population growth, that is driving the market, not the cost of land at the boundaries."