The first KiwiBuild homes in the South Island will be built in Wanaka.
The Housing Minister Phil Twyford this afternoon announced 211 KiwiBuild homes will be built in the town over the next two years.
The starter houses will be part of an 800 home development called Northlake.
Mr Twyford said KiwiBuild was restoring the Kiwi dream of home ownership to thousands of families.
"For first home buyers who have been locked out of the market, KiwiBuild is providing the chance to buy an affordable modest, starter home in one of the most beautiful parts of New Zealand."
Queenstown Lakes is one of the fastest-growing districts, and with the highest median house price in New Zealand, has faced major housing affordability challenges.
"The typical house price in this district now exceeds that of Auckland and the effects of that are horrendous, particularly on the people who need to do the work that keeps our visitor economy ticking over," Mr Twyford said.
"In August, we raised the HomeStart and Welcome Home Loan price caps for Queenstown Lakes to $650,000 for new builds, bringing them in line with KiwiBuild. Our government is taking a comprehensive approach to assisting first-home buyers in one of our least affordable areas."
Northlake will also have its own village centre, with shops, playground, childcare and healthcare centres, dining options and small business office space.
The first 10 KiwiBuild homes to be balloted at Northlake include four two-bedroom and six three-bedroom modern standalone homes.
Prices for the homes range from $565,000 to $650,000.