A bit of maths.
For level 5 we need 1000 citizens.
Appartments provides 160 in 4 tiles : 40 citizens per tile (house provide 30 per tile)
1000 / 40 = 25. But appartments need 4 tiles. So you need to use 6 appartments and 2 houses = 26 tiles
We need 26 tiles to let a city get to level 5. And that's with the best housing possible (at the moment). Isn't 26 tiles a bit too much ?
One more problem : how will we be able to create an army of 10 000 men from a city that cap at 1000 or 2000 or 3000 citizens ? Because when you get to level 5 youget no more tiles. And more population = more housing. So with a hard cap on available tiles, there will be a hard cap on max population of cities.
Maybe an infinite tech that would let housing be more effective. Or at level 5, a city will still get tiles to build at the rate of 1 tile every 10 turn. Or housing become free at level 5, or anything that won't cap our max population.