More than 4300 people have registered for KiwiBuild in Tauranga – the third-highest number in the country behind Auckland and Wellington.
The Government's KiwiBuild Unit opened registrations of interest on July 4 and by July 17 it had received 35,496 from around New Zealand - with 4344 from Tauranga.
Tauranga mayor Greg Brownless called the local number "absolutely huge", possibly because the income limit for eligibility for the Kiwibuild homes was higher than expected.
Couples earning up to $180,000 would qualify for KiwiBuild affordable homes. The income limit for sole purchasers would be $120,000.
The price cap for any of those houses built in Tauranga would be $500,000 and eligible buyers would have an equal chance to own one at cost price through a ballot system.
Brownless said there was clearly demand in Tauranga, but the problem would be supply.
"They [builders] have got more work than they can probably cope with, many of them, so it's going to be interesting to see how that translates into houses on the ground. I hope it does."
Housing and Urban Development Minister Phil Twyford said there was significant interest in KiwiBuild in the Bay of Plenty, "with a third of all registrations coming from the Tauranga region".
He said the people of Tauranga had been hit hard by the national housing crisis.
"Astronomical house value growth in Auckland has trickled down to the Bay of Plenty and made your housing unaffordable for too many families. This has in turn raised rents and added to the growing problem of homelessness too many locals are facing."
Twyford said KiwiBuild was stepping in where the market had failed.
"It will build thousands of modest, starter homes – including some in Tauranga – to help families once again realise the dream of owning their own home."
It is still not known how many of the homes will be built in Tauranga.
Matt Fraser, manager of KiwiBuild Land Supply, said successful developments were expected to be announced from August, depending on negotiation timeframes.
Tauranga MP and National Party leader Simon Bridges said KiwiBuild was "a big fat red Labour Party herring because it doesn't build genuinely new, genuinely additional homes".
He said it was just putting a new name on something already being done by developers.
"For any of this to stack up, it would mean that there were going to be something like 4000 new houses created under KiwiBuild and there just won't be."
Bridges said what really mattered for Tauranga was the Housing Infrastructure Fund coming to fruition.
"So it's good to see that the Government's going along with that, albeit, I would argue, in a more modest way than we were."
He said the Housing Infrastructure Fund work in Papamoa East needed to have started "yesterday" and he also spoke of the importance of more social housing being built in Tauranga.
Priority One projects manager Annie Hill said the residential construction sector had been "extremely strong" in Tauranga over the past four years,"so the demand for new houses is there, both now and in the future".
She said two challenges for KiwiBuild were finding resources to construct the new houses and keeping the price affordable.
"With construction activity in Tauranga growing by 98 per cent in the last four years, unless there is a significant increase in people working in the construction sector, there is unlikely to be a lot of capacity for growth."
Hill also said the cost of building materials in New Zealand was high compared to other countries, making it difficult to reduce the overall cost of constructing a house.
She said having affordable housing options was important for Tauranga as it affected the city's ability to attract and retain the skilled and unskilled people that its businesses, schools and health sector needed.
Johnny Calley, owner of Calley Homes and Tauranga Homes and also a national board member of the Master Builders Association, said he did not think there was going to be a resourcing issue locally.
"The industry had a really vibrant market to deal with for the past three years and has coped adequately," Calley said.
"I think unless they build all the houses at once, which they're not going to do, then I can't see there being an issue because there are still good levels of trading in place and businesses have still got capacity to borrow even further if need be."
Calley said there was still a lot of detail to come out about KiwiBuild.
•The Government plans to build 100,000 KiwiBuild homes in 10 years, at least 50,000 of which will be in Auckland.
•To be eligible, people would have to be first-home buyers or "second chancers", New Zealand citizens, permanent residents or those who ordinarily reside in New Zealand, and they would need to intend to own and live in the new home for at least three years (with some exemptions).