Unless you have a visual glitch/bug in your city, when you want to place an expansion the unused area around your city changes colour. Squares where you may place an expansion have a rope&pole fence around them.
The problem was I had an area at least twice the size of my city lit up so I knew the rope &pole fence was too far away to be right. I had a similar problem in my other city a few weeks ago. The squares were lit up but I couldn't place a building in them. Eventually it solved itself and this time it solved itself after several trips out of the city.