House in paradise for $230k?

An Otago town has launched a plan to lure families by offering new homes costing half the price of the government's affordable housing.

Kaitangata in South Otago is a quiet coal town of 800 people trying to reinvent the Kiwi dream.

Sounding like a real estate agent, local farmer who is leading the project Evan Dick, said the town could not be beaten for lifestyle.

He takes RNZ News to the hill above the Kaitangata School, where the project's first three sections are.

"I mean, look where we are standing now. If you are a good enough caster, you could biff a line to the river and catch a trout, or biff it that way and catch a blue cod," Mr Dick said.

"That is how close you are to the real New Zealand. It's here," he said.

Special Housing Areas in Auckland have to include a proportion of so-called affordable housing costing no more than $550,000.

Here the townfolk have got together a bank, a builder, a law firm and some empty sections to promise families a basic, but brand new, house for $230,000.

They have already sold the three sections - to a man coming back to the town after 25 years away, another to the son of a local and an Auckland family moving south.

Mr Dick said they had another eight sections ready to go.

The town of 800 people has shrunk over the years and no longer has a lot of shops, just a pub, a dairy and a fish and chip shop.

But the supermarket in Balclutha is just eight minutes drive away.

The people here do not mind. They think they are in paradise and they could not understand why the rest of country did not want a piece of it.

Mr Dick said they never planned the project because of the housing shortage in Auckland, but the timing was good.

"It won't appeal to everybody, but it has got to appeal to the odd person that wants their own quarter-acre [section] and their own Kiwi dream," he said.

Ross Pudney moved with his family from Tauranga to Kaitangata six years ago because they could not afford to buy up north. He said it was hard at first but they had quickly settled in. He said he wished the plan was in place when they moved down.

"We looked at Kai, and we went Kai's the place to be. It's got everything there. The river, you can go fishing, catch whitebait and do all the outdoorsy things.. for half the price of a house in Auckland," Mr Pudney said.

"We'll never go back."

Most of the houses will be built by a local construction firm Big River Homes run by Mark van Asperen.

He builds them at a yard in Balclutha and has them transported nearly finished to the site, which he said cut tens of thousands of dollars off the bill.

Teacher and former principal at the Kaitangata School Joyce Beck said she could not understand how housing costing $500,000 up north could be called affordable.

The project's organisers said they might only sell three new houses, or they might sell 20, but either way, it would bring a few new faces into town and give them a better life.