The government has confirmed it will provide more than $50 million of 10 year interest-free loans to the Queenstown Lakes District Council.
The money will be used for major infrastructure projects near Queenstown, enabling 1850 houses to be built in Kingston and new greenfield sites on the Frankton Flats.
The median house value in Queenstown is over $1 million.
And while the council has introduced a raft of measures to address the affordability crisis in the district, it has long conceded it cannot do it alone.
Now the government has come to the party providing $52 million in interest-free loans from its Housing Infrastructure Fund to allow further residential development on more affordable land outside of Queenstown.
The first 950 houses in nearby Kingston, are expected in 2020.
Further development is also expected in Ladies Mile, just outside Frankton.
Minister of Housing and Urban Development Phil Twyford said more announcements were expected for the district with the council working with the Ministry of Business, Innovation and Employment, and the NZ Transport Agency on further development at Ladies Mile 12 kilometres north-east of Queenstown.