Fletcher Building has won a government contract to build 237 homes on an 11.5-hectare crown-owned site in Christchurch, including 89 which will be priced below $NZ400,000.
Construction is expected to begin by the end of 2014 at a build rate of 10 homes a month and a completion date of 2017, Housing Minister Nick Smith said in a statement on Thursday.
The land is in the southern suburb of Hornby.
Financial details of the partnership weren't immediately released.
Dr Smith said the development will be a mix of affordable and market-priced homes.
The Fletcher proposal for the land gave the best value for money for the taxpayer, he said.
The median house price in Christchurch was $NZ461,000 ($A429,176) in September.
Earlier this week, Fletcher told shareholders at their annual meeting that a positive trend in residential housing consents in the second half of 2013 is expected to flow through into housing construction.
Chief executive Mark Adamson said the company plans to triple the pace of home building in New Zealand to 1,000 homes a year to capitalise on strong housing demand.