The government has signed an agreement with Ngāti Whātua which gives the green light for a 400-home development at Hobsonville.
Housing Minister Nick Smith says the subdivision will go ahead next summer with the first homes completed in early 2018.
Dr Smith says 15 percent will cost below $450,000, 7.5 percent below $500,000 and 7.5 percent below $550,000.
At least 50 percent of them will go to first home buyers and the other 50 percent will be sold below Auckland's median house price.
Ngāti Whātua had right of first refusal over the surplus land at Hobsonville and has signed a memorandum of understanding about its use for housing.
Dr Smith says a similar agreement is being explored with Ngāti Whātua involving 18 hectares of land in north-west Auckland owned by NZTA.
"There is no sense in having surplus Crown land sitting vacant when Auckland has major housing issues derived from a shortage of land," he said.