New Zealand's largest housing development has clocked up 500 completed new homes and another 389 are under construction.

Prime Minister John Key and Housing Minister Nick Smith were at Hobsonville on Tuesday to mark the event.

"It epitomises the scale and momentum the government wants to achieve," Dr Smith said.

"There's strong demand and sales are being made off the plans."

Hobsonville is former Defence Force land in Auckland and is being developed by the Hobsonville Land Company, a Housing NZ subsidiary.

The company has just announced the opening up of a new precinct where 540 homes will be developed.

Dr Smith says 30 per cent of them will be priced at under $NZ550,000 ($A498,460) - a higher proportion of affordable houses than the 20 per cent already provided for at Hobsonville.

They'll come on stream in 2017.

The Hobsonville project was launched by the previous Labour government in 2002 but no work was done and it became mired in planning disputes.

The current government revived it in 2010, gave it special housing area status and earthworks were consented a week later.