More than 30 people attended a meeting on Sunday to protest the government housing agency Kāinga Ora’s decision to sell part of Albertson Ave, which had been earmarked for 12 new state houses from a project of 20.
Eleven homes have already been knocked down to make way for the project.
Organiser Sonja Mitchell said although the group was in its early stages, it had already collected hundreds of signatures for its petition to Kāinga Ora, while it was also preparing an open letter to Housing Minister Chris Bishop.
Ms Mitchell said there was a "sense of unity" at the event.
"We were united in feeling strongly that the government had broken a promise to the people of Port Chalmers and wider Dunedin: the promise to replace the 11 state homes that were knocked down on this site with 20 new homes.
"We were united in feeling outraged that the government is now trying to sell this publicly-owned land from under our feet."
Ms Mitchell said there were planned rallies, marches and possibly a concert to raise awareness about the situation with the wider public.
Several council candidates attended Sunday’s event, including Mickey Treadwell, Anna Knight, Evelyn Robertson and Marian Poole.
Ms Knight said the government was trying to mislead the public over housing.
"Ultimately, their way is more expensive and far more painful."
Developer Cyndee Elder said she had been following the upheaval of the decision not to develop the land.
She said she would like to take the Port Chalmers community group to Housing Minister Chris Bishop with a plan of how to re-use the land for versatile community housing.
"We could even fit possibly more houses on the land than originally planned."
Kāinga Ora regional director for Otago, Southland and South Canterbury Kerrie Young said it had no plans to review the sale of the 2-12 Albertson Avenue site.
"We made the decision to sell the land after careful consideration.
"As an agency, we have reviewed the vacant land we own to determine what makes sense to hold on to for the commercially responsible development of social housing and what is best released for others to develop."
Ms Young said there was limited demand from applicants on the Ministry of Social Development’s social housing register for new homes in Port Chalmers, and the site was no longer needed for social housing.
"Selling this land also opens opportunities for others to increase housing supply in the area."
