You'll find serious resistance by existing residents to even moderately increased density, that isn't solely a NZ phenomenon either. People are fiercely protective of anything which may affect the value of their property.

Logic has gone out the window regarding sensible planning, it's all politicised and no longer serves the greater good.

House prices could be slashed overnight with the stroke of a pen in many cities on earth.

The problem is that builders in NZ suck at building apartment buildings. The quality is rubbish, and they are not that much cheaper than houses, in many cases they are much more expensive due to the Body Corporate Fees (~10000 NZD / Year).

At first we were looking for an apartment, but then realised that it was just hopeless to find affordable apartments which a of reasonable quality.

Its not an either / or thing. Lots more apartments are being built as well

In addition to the issues around lack of industry familiar wtih apartments, many native NZers don't want to live in apartments as it doesn't fit their culture or way of life.