An affordable housing advocacy group is urging the Nelson City Council not to approve new Special Housing Areas unless they offer homes that are actually affordable.
Nelson is included in the government's housing accord programme, which allows councils to free up land for new housing and fast-track new developments.
Building and Housing Minister Nick Smith, who is also the MP for Nelson, said average house prices in the city had increased and more homes were needed.
Voice Nelson spokesperson Kindra Douglas said the programme was not working because it did not contain any criteria that defined the meaning of affordability.
She said the median house price in Nelson was now $470,000, but developments proposed under the special housing legislation would have homes with price tags well above that.
"All we're doing is building more houses and in the long term that might increase supply, but it's not increasing supply that actually ordinary New Zealanders are using as homes. All it will do is increase the supply of investment properties," she said.
The council is considering changes to the current accord at a meeting today.