The Housing Trust will be overseeing at least 150 homes in Kiama's proposed 1000-house development Springside Hill.
The Traders in Purple development is unusual in that it sections off 25 per cent of homes for locals, first-home buyers, essential workers and affordable housing.
The Housing Trust, who has previously partnered with Traders in Purple on its Northsea development in Crown Street, Wollongong, will either own or manage around 150 homes in the 114-hectare Springside Hill site.
"Our involvement at Springside Hill ensures that homes will be owned and managed by Housing Trust in perpetuity, giving hope to families who would otherwise be forced to leave the area or risk homelessness," Housing Trust CEO Michele Adair said.
"Being deliberate about building more affordable rental housing is the only way to tackle housing stress. We are delighted to have another opportunity to work alongside Traders In Purple to bring Springside Hill to fruition."
Traders In Purple Chief Executive Officer Brett Robinson said the partnership with the Housing Trust will reduce the occurrence of Kiama locals finding themselves priced out of the town.
"Together with Housing Trust we want to keep locals local so that young people are not forced to leave the area, and essential services and businesses are able to retain and attract workers," Mr Robinson said.
"Springside Hill is an opportunity for a sustainable housing solution for the area. It is a long-term vision to be delivered over many years. Along with Housing Trust, Traders in Purple will remain committed at every step of the journey."
A formal planning proposal for the project is yet to be lodged with Kiama Municipal Council but that will focus on the required rezoning of the land rather than a request to start construction.
George Geagea, another Traders in Purple director, has said the housing project is a long-term vision - something that will be delivered over decades.