My understanding is that the way they designed Island Sanctuary they genuinely CAN'T change it to allow housing without a complete overhaul, so the chances of that are unlikely. There's nothing to say they can't implement a NEW system, however.

I would propose instanced housing within the city-states themselves. Maybe somewhere near the various market districts for convenience to market boards. To get to one, you would talk to an NPC or a door similar to how you do apartments now. Your own would give you the option to go to your house, and to visit a friend or do a little sightseeing I'm sure we could arrange some kind of system to search for specific houses/names rather than flipping through endless tabs.

The instanced area would, by default, be themed on the city-state you purchased from, but there could be all manner of customization available. Perhaps you can change themes to other city-states (or even custom themes similar to housing skins) if you wanted to imagine an easter oasis in the desert for example. Or maybe you could specify if you wanted an urban style house where you have the equivalent of a penthouse suite with a rooftop garden rather than a traditional house and yard. The space itself would be roomy enough to hold the equivalent of up to a large house depending on how much you want to invest into it, and it would be easy enough to arrange it with a gorgeous view of whichever city-state you selected that shows NPC residents walking around doing their thing (I vaguely recall them mentioning once that it would be very hard to set up real-time views for instanced houses because of players, but I doubt anyone would complain too much about a view with NPCs moving around...).

You could even set the thing up with various amenities like purchasing a pool to swim in or a seasonal theme (snow, autumn leaves, etc.) or have various styles of floor-plans. There would be space for gardening and outdoor furnishings. Basically whatever we can imagine could be done. It would have all the same perks as a house without the wards or neighborhoods.

As for auto-demolition... I would propose instead that they expand ALL auto-demo timers to six months or even a year and apply them equally to everything, including apartments. Six months or a year would give a lot more flexibility for those times when life happens without completely removing the timer and thus making CPU-kun cry brokenly in a corner over all the information it needed to process. I would even suggest a way to, in-game, arrange for a hiatus if you know you're going to be gone for an extended period of time for any reason. It could put your data in a separate list that doesn't get loaded until either your hiatus period runs out and the house is demolished or you log back in and enter your house.

That's my two cents...