The government plans to spend $1 billion on increasing housing supply in areas of high demand.
Local councils in Christchurch, Queenstown, Tauranga, Hamilton and Auckland will be able to apply for money to bring forward new roads and water infrastructure needed for new housing.
Prime Minister John Key made the announcement as part of his keynote speech at the National Party conference, being held in Christchurch.
The fund would only be available for “substantial new infrastructure investments” that support new housing – not to replace existing infrastructure.
John Key said while the government was already doing a great deal to try to increase housing supply, some councils have strict debt limits that prevent them from investing in the necessary infrastructure.