The Government has paid $70.4m for a large chunk of land in Tauranga where it plans to build 1000 homes.
As of last Friday, Kāinga Ora is the new owner of the 95ha greenfield development site on State Highway 29 in Tauriko West.
Of the 1000 "new, warm, dry" homes it plans to build, 200 will be affordable homes and 200 will be public homes.
However, it could be three or four years before construction starts.
Kāinga Ora Bay of Plenty regional director Darren Toy said the $70.4m purchase was the first acquisition under the newly-created Kāinga Ora Land Programme.
The programme was set up to lead strategic land acquisitions to enable housing and thriving communities in areas of need, he said.
"Like many parts of the country, there is a strong current and forecast demand for affordable, market and public housing in Tauranga.
"A large-scale development, such as one Ferncliffe has potential for, will go a long way towards meeting this demand, providing a range of additional housing in this high-growth area."
Toy said planning and design work was under way but it was estimated about 1000 homes could be delivered on a portion of the site with a mix of affordable, public and market housing.
"Firmer estimates on the number of homes and typology will be known as planning progresses over the next year."
The rest of the site includes low-lying wetland areas and steep land that, although unable to be developed for housing, provide the opportunity for recreation areas, he said.
Alongside partnering with local private developers and builders, Toy said Kāinga Ora had a strong relationship with local hapū as well as local and central government agencies.
Toy said the land deal would enable Kāinga Ora and its partners to deliver hundreds more homes in a location with already 5000-plus jobs in the neighbouring Tauriko Business Estate.
The development would bring further employment and housing options as well as opportunities for greater investment in infrastructure, including roading, public transport and schools in the area, he said.
"Ferncliffe Farm is a long-term investment in housing for the Tauranga community."
Toy said building timeframes would be known once the development plan was completed in the next year or so.
"A site of this size, with earthworks and land development requirements, could take three to four years before construction can begin."
Tauranga commercial landlord and developer Bob Clarkson has criticised the sale.
Clarkson, a former National Member of Parliament for Tauranga, owned 210ha next to Ferncliffe Farm.
In 2004, Clarkson wanted to buy the neighbouring farm with plans to develop a multi-million-dollar community including affordable houses alongside the Wairoa River.
But he said he was held up by rezoning and consenting issues and decided to let his ambitions go.
"I wanted to do develop it all together.
"Under absolute strain, I offered $37m, which I thought was about $10m too much back then."
Clarkson later sold his rural land for about $50m.
The 81-year-old said he believed if he had been able to buy the land 15 years ago there would have already been affordable homes built.
"Prices will now go through the roof."
Chief executive of privately owned developer Winton, Chris Meehan, said his company planned to deliver 1000 homes on the land, which would have included a retirement village of about 200 homes.
"Tauranga needs houses fast and they need houses now. The fastest way of delivering 1000 houses on the site was in the hands of a private developer.
"If the first person moves into the first house inside of four years I will eat my hat."
Minister of Housing Megan Woods said Kāinga Ora had strict protocols on what it pays for land with a general rule to not pay any more than 5 per cent above its valuations.
"This applies to the Tauranga purchase," she said.
Woods said a key aspect was being able to deliver housing over and above what a private developer would be likely to.
"In the case of this purchase, it was assessed that a private developer would most likely deliver approximately 560 dwellings based on the kinds of existing properties in the Tauranga area.
"Kāinga Ora assessed it can deliver up to 1000 homes."
Woods said it was not surprising developers would be disappointed they were unsuccessful in land purchases.
"But the reality is that Kāinga Ora is a significant market player with a massive work programme under way to deliver new public, affordable and market housing."
Tauranga City Council Commission chairwoman Anne Tolley said the news was positive for one of the country's fastest-growing cities.
"Tauranga has a serious housing shortfall, which has driven up prices and made buying a home extremely difficult for existing residents and people wanting to move to the city.
"Development of this block will provide a unique opportunity to deliver quality and affordable outcomes, which meet a range of housing needs... we welcome the leadership role Kāinga Ora is playing in that process."
Chairman of the Urban Taskforce for Tauranga, Scott Adams, said he hoped now that Kāinga Ora was a landowner within Tauriko West it would help to attract Crown funding to accelerate much-needed State Highway 29 upgrades.
The Classic Group confirmed it did make a bid on the farm but did not wish to comment further.
Ferncliffe Farm has been in the same family ownership since 1927, with the fourth generation now on the land.
Held in four titles, it is one of three key privately-owned blocks forming part of the 329ha Tauriko West Urban Growth Area identified by the Tauranga City Council.
The other two main blocks are owned by developers.