A Maori tribe has agreed to build 430 new houses at Hobsonville with 80 per cent priced below the Auckland median price.
Ngati Whatua o Kaipara investment committee chairwoman Anita Mazzoleni said the tribe had committed "a reasonable chunk" of its 2013 Treaty of Waitangi cash settlement of about $30 million to buy 9ha at Hobsonville for the project.
Thirty per cent of the houses will be sold at set prices at or below the KiwiSaver Homestart loan maximum price of $550,000.
Another 50 per cent of the homes will be priced between $550,000 and the Auckland median price, which is now over $800,000.
The other 20 per cent will be high-end houses selling for whatever the market will bear.
Iwi development company chief executive Daniel Clay said construction would start next year, the first houses would be completed in early 2018 and all 430 houses would be built by 2020.
He said the iwi was also negotiating with the Government to buy a larger 18ha block that could accommodate about 800 houses at Brigham Creek are, and wanted to buy other surplus Crown land between Hobsonville and Wellsford.
Prime Minister John Key said the projects were "a demonstration of what a powerful force iwi is in New Zealand".
He said Auckland's housing shortage was due to the fact that people wanted to live in the city, and housing was actually more affordable than in 2008 because lower interest rates offset higher prices.
"Yes we can potentially apply taxes, although those are of various degrees of merit depending on what you look at," he said. "But the long term solution is supply."