Building and Housing Minister Nick Smith has announced the development of 237 homes in the Christchurch suburb of Halswell.
Fletcher Residential has been named as the private sector developer of the project on former Crown land.
When the development was first announced earlier this year, the figure of 275 homes was floated. Now, 237 are planned, with 89 of them to be sold for less than $400,000.
Dr Smith said the development of the 11.5 hectares of former Transport Agency land will help families into home ownership.
He said he expected Fletcher to start construction by the end of the year, with the first homes up next year, and the whole project completed by 2015.
Fletcher Building said even with earthquake-hit Christchurch's housing shortage, the company has to build the sort of homes people will want to buy.
Its housing chief operating officer, Steve Evans, said it was possible to build cheaper houses but they would be at least two-bedroom homes, which could not be built below a certain price.
Mr Evans said it was the right product for the right location where people would want to live.
But Labour associate housing spokesperson Poto Williams said the Government was dreaming if it believed it could deliver affordable housing to Christchurch residents.
Dr Smith was ignoring the fact the median house price in Christchurch was already $413,000, she said.