Counties Manukau District Health Board is considering selling nearly 11 hectares of land back to the government for a housing development in south Auckland.
In a newspaper ad seeking public feedback, the DHB said the vacant land next to its Manukau super-clinic might not be needed for future health services.
Housing Minister Nick Smith said the site had room for about 250 houses, and it made no sense for it to remain vacant when there was a need for housing.
Dr Smith said the government was considering developing the land with the help of local iwi.
QV valuations this week showed house values in Auckland region were averaging $975,087, and nationally were now rising at their fastest rate since 2004.
The government recently announced it would offer $1 billion to councils in interest-free loans to pay for infrastructure and $100 million was also earmarked in this year's Budget to pay for land for housing.