The Government has set up a new Crown company to get more houses built in Auckland.
Prime Minister Bill English unveiled the new company, Crown Infrastructure Partners, in Drury on Sunday afternoon - where 700 new homes are planned.
The $600 million boost was welcomed by Auckland Mayor Phil Goff, who said it would "enable Auckland to speed up the construction of thousands of new homes in our city".
"The initial investment of $387 million in transport and water infrastructure in Drury south and west, Paerata and Pukekohe will enable the construction of 17,800 dwellings much earlier than would otherwise be the case.
"A further major development will be around Wainui in north Auckland with $201 million in infrastructure funding required for an additional 5,500 dwellings."
The announcement comes two days after Deputy Prime Minister Paula Bennett admitted the Government's response to the city's homelessness crisis had been too slow.
"Crown Fibre Holdings will be re-named Crown Infrastructure Partners, and bring the investment skills and experience gained through the Government's world-leading ultra-fast broadband rollout to the job of attracting private investment in roading and water infrastructure that open up big new tracts of land for more housing development," said Finance Minister Steven Joyce.
Mr Goff especially likes the new package, because it has the potential to bring more than 23,000 homes to the city without more borrowing by Auckland Council, which is already close to its debt ceiling.
"It will be funded through development contributions and targeted rates within the new housing developments," said Mr Goff.
"Auckland is growing by 45,000 new residents a year and requires unprecedented levels of infrastructure growth to keep up with demand.
"Increasing the supply of housing is a critical part of overcoming our housing shortage and slowing price rises caused by demand exceeding supply of housing."
The new homes will be built in Wainui, Pukekohe, Paerata and Drury.
The Property Council called Mr English's announcement a "ray of light for New Zealand's housing crisis".
"The development community is ready to respond to the urgent need for more housing," said chief executive Connal Townsend.
"The handbrake has been a lack of infrastructure such as roading, water and sewerage that supports development. Building cities costs a lot of money and infrastructure is a large proportion of that cost."
He said the Government's infrastructure fund has helped, but as it's a loan, debt-laden councils have been wary of using it too much.
"The traditional way we have funded growth in our cities is way out of date and cannot deliver the infrastructure and housing we need.
"By setting up a Crown company, the Crown retains the legal ownership of the debt, thus allowing councils to access the fund and get much needed infrastructure built."