If the plot has to be free in order for you to reserve it, how will it help the situation where the freed up houses are sniped by resellers or just faster clickers? It's the same amount of people competing for the house no matter if they do it in game or by lurking in the Mog Station. I've also seen a suggestion about showing the demolish timer on houses, but that would also just be a matter of who clicks their buttons the fastest. It's a mere illusion of having a chance and would only move the competition to another platform.

With too little an amount of houses, free plots will go to 1) the first buyer/booker, 2) the highest bidder or 3) a random buyer. The first favors those most determined and with the best connection, the second favors the richest and the third favors no one but makes housing a worse gamble than Jumbo Cactpot. Right now we have a combination of 1 and 2. Note that none of the three methods of competition would be needed if there were enough houses.

Your suggestion relies on the assumption that enough new wards are made to meet demand, but unfortunately that's pretty much the core of the problem: new wards are not made in time.