The Timsfield Homefront project was an initiative of the Hawea Flat School Fundraising Trust, and delighted chairwoman Lindsey Schofield said a "significant" amount had been raised, even though the result fell slightly short of the trust's reserve.
The total would be released once final accounts had been completed and she believed people would be very pleased with the result.
"I am happy, ecstatic. It was very, very close to our reserve. We had to be realistic about the market ... We really, really wanted it to sell today."
The trust has not said how much it cost to build.
Sponsors, supporters and volunteers have worked on the house and garden since last April. Timsfield subdivision developer Willowridge Developments has also helped with the project.
Buyer Simon Wilkie (31), a Wanaka joiner, said he was thrilled to buy his first house, which he thought was "a bargain".
"It's got three bedrooms, two bathrooms, everything has been done, all the irrigation is in. I don't have to worry about anything."
Mr Wilkie confirmed he would live in the house, which his father Allan had helped him buy.
A large crowd attended the auction, which attracted three bidders.
Bidding started at $250,000 and rose slowly, in $5000 and then $1000 lots.
