The Wellington City Council will build 750 new units of social and affordable housing in the next 10 years, the mayor has announced.
It is a part of the city's housing upgrade programme, set up in December, to tackle a housing shortage in the capital.
The first units are already going up on a site in the central suburb of Mt Cook.
Mayor Justin Lester said the scheme aimed to avoid a housing crisis like the one in Auckland.
"We don't want to be like another Auckland. We want to be a Wellington situation where people who want to come to the city and want to be able to buy a house can afford to do so. I don't want a situation where future generations are having to rent forever because they can't afford to get into their own home."
Mr Lester said some of the houses would be social housing, while others would be affordable homes aimed at first-home buyers.