The Government has signed off deals to build 740 homes on spare land in Auckland, some of which must be sold for "affordable" prices.

Housing Minister Nick Smith confirmed this afternoon that the Government had completed negotiations on three sites in Manukau, Mt Albert, and Waterview.

The biggest development was a 1.85 hectare site at Manukau Station Road, where up to 600 apartments would be built. The land was bought off the Auckland Council.

A 0.91 hectare site on Great North Road in Waterview would fit another 80 new homes. It was previously owned by the New Zealand Transport Agency (NZTA) and was leased to a boarding hostel.

The 0.47 hectare site in Mt Albert, on the corner of New North Road and Soljak Place, was bought from the NZTA and a private landowner and will fit 60 townhouse apartments.

Ngā Mana Whenua o Tāmaki Makaurau Limited Partnership would be given first right of refusal on the Mt Albert site as part of the iwi's Treaty settlement.

Development agreements were expected to be signed off between August and the end of the year, and the first houses were expected to be built on the sites within 18 months.

The developments which featured apartments were likely to take up to two years.

"This process is more complicated where there are tenants or multiple titles involving private land to make the optimum site for housing development," Dr Smith said.

A portion of the houses built on each site must be sold for an “affordable” price – around $600,000.

The policy to free up surplus Crown land for housing was one of the National-led Government's major announcements in last year's Budget, and $52 million was allocated for the scheme.

Dr Smith said that the three new sites, along with a previously announced 200-house development in Moire Road in Massey, had exhausted the Budget funding.

Finance Minister Bill English has confirmed that the scheme will get a funding top-up in Thursday's Budget.

The policy has suffered delays and hit a few hurdles since being announced in Budget 2015.

Ngati Whatua took legal action against the Government in June, saying that the plans to sell off Crown land to private developers appeared to breach its Treaty agreement.

It later agreed to drop its legal challenge after securing an agreement that 40 per cent of construction would be social or affordable housing.

Deadlines for signing development agreements and building the first homes have also been pushed back, partly as a result of the iwi challenge.