Special housing areas (SHAs) were meant to increase the affordability of homes by streamlining planning and consent processes.
But figures obtained by RNZ show the average price of homes sold this year in the Bridesdale Farm development - Queenstown's first special housing area - was more than $800,000.
Those homes are all finished and ready to move in to.
They have been built by property companies, building firms and individuals looking for profit, whereas people did have the opportunity to buy a bare section and build their own home for less.
Special housing areas have created about 1000 sections and units in Queenstown, and about 700 more are possible.
National MP and former housing minister Dr Nick Smith designed them to increase the affordability of homes by ``streamlining the planning and consent process''.
The Labour Party - which derided the legislation in opposition, saying it was used by speculators and developers to get rich - was silent on the possibility of scrapping them, RNZ reported.
This week an interview request by RNZ with the minister with oversight of SHAs - Jenny Salesa - was declined as the Government did not want to distract from its other housing policies, namely KiwiBuild.
The Government would assess SHAs sometime in the future, RNZ was told, despite Housing Minister Phil Twyford describing them as a ``spectacular flop'' in the past.
Average property values in Queenstown Lakes district sat at $1.15million in May - a 74% increase on average values in June 2014 when Queenstown Lakes was included in the special housing area legislation.
But Queenstown Lakes District Mayor Jim Boult said without the special housing areas, affordability would be even worse.
He said he was unaware of the $890,000 price tag of the latest sale in Queenstown's SHAs.
``The problem is you can create sections and people can build houses on them, but that doesn't then stop them selling them on the open market for whatever price the market says they're worth,'' he said.
``One of my great criticisms in the past has been the fact that there has been no restrictions on people just profiteering from the value of a house that's created,'' Mr Boult said.
Concerns about profiteering had been answered with a council requirement for 10% of homes in those special housing areas to be set aside for truly affordable housing to be run by the Queenstown Lakes Community Housing Trust, Mr Boult said.
Those affordable homes might be in the form of rent-to-buy, affordable rentals or shared ownership.
The trust's executive officer Julie Scott was also critical of the Bridesdale Farm development in the past and led the call for the 10% affordable homes provision.
She told RNZ that stand had paid off.
``There's no silver bullet to solving the housing issues of the Queenstown Lakes district,'' she said.
``170 homes is pretty good to me when we have got 520 households on our waiting list.''
At present there were 29 homes in the pipeline for the trust in special housing areas and cash equivalents from other developments.
Dr Smith stood by the legislation and believed it had been a success.
He said the slow rate of building in the areas was to be expected.
``Anybody who has had experience in the housing area knows that it takes time from when the policy is corrected and made more conducive to building more houses and more affordable houses to when the results come out the other end,'' Dr Smith said.
Mr Boult agreed: ``You have to appreciate that this isn't a five-minute process.''
The developers of Bridesdale Farm - like the Government - declined to be interviewed.
Analysis by Mountain Scene last July showed 41 of the 135 sections accelerated at Bridesdale Farm were owned by building companies, developers or house rental firms.
Some of those properties are now coming on the open market and selling at market prices.
Some 39 of the 135 sections were bought by first-home buyers or those who, at least, did not own other property elsewhere. The rest were second homes or people buying to let.
They all could buy the land and then contract a builder.
Bridesdale was designated an SHA on June 9, 2015.
At the time, sales literature suggested three-bedroom house and land packages, for those buying off-plan and contacting a builder, started at $450,000.
But construction costs nationally escalated during an ironically lengthy consent process.
Bridesdale was finally approved in March 2016 after hearings with council-appointed commissioners on major details, including storm water, drainage and the number of properties.
Titles on sections, costing $200,000-$340,000, were issued in May 2017. Building takes about nine months to a year. Build costs vary due to specification, the number of storeys etc but are estimated at $250,000-$440,000.
Bridesdale was developed by Lakes District developers Chris and Michaela Meehan's Bridesdale Farm Developments Ltd.
The couple have also developed Wanaka's Northlake and are developing Waterfall Park, a hotel and wellness retreat near Arrowtown.
Another development in Queenstown, Bullendale in Arthur's Point, is now selling off-plan properties for $699,000 for two-bed, $879,000 for three-bed, and $919,000 for four-bed.
It plans an extension to its development under SHA legislation.
• Reporter Paul Taylor built and owns a house in Bridesdale.
- additional reporting RNZ
