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The High St project will have 24 units in total, three of which are already complete. All units have been sold.
Project architect Tim Ross said construction would likely be complete by Christmas next year.
The former High Street School site was bought by Urban Cohousing Otepoti Ltd in 2013 with the aim of creating a co-housing neighbourhood built on ecological values and encouraging social interaction.
The units are self-contained, but they share some "bonus" facilities such as extra guest rooms, multipurpose spaces, common gardens and green areas.
"The concept is that it's supposed to be a more social, more sort of sustainable sort of community than a standalone property."
The buildings were being built to a "passive house" standard, for which the aim was warm and comfortable housing with a low ecological footprint.
The new units were triple-glazed and had structurally insulated panels which meant they could reach about 21degC for most of the year with no heating, he said.