The PC45 request has been made by Michaela Ward Meehan, of Sydney, and proposes rezoning 220ha of land in Wanaka - between Aubrey Rd and the Clutha River - from the existing rural general and rural residential zoning to a new Northlake Special Zone.
It would allow for about 1600 residential dwellings, plus some community and commercial activities.
After being publicly notified last year, the plan change application attracted 125 submissions, the majority in opposition.
Consultant planner for the Queenstown Lakes District Council Vicki Jones has recommended existing zones be used for the Northlake subdivision and the maximum number of dwellings be slashed to 710, with a minimum lot size of 700sqm.
She also recommended the first stage of development - around 440 sites, be delayed until 2019.
The balance would be further staged over the following 10-15 years.
In his legal submissions, made on behalf of Ms Meehan and two other landowners, Mr Goldsmith said the issue of demand was at the heart of the hearing.
Submitters had claimed there was insufficient demand for additional residential land to be rezoned and Ms Jones' recommendations were largely based on the 2012 Wanaka Structure Plan's predictions of future demand.
However, there were a range of factors which could influence the town's growth during the next 20-plus year period which could not be predicted now, Mr Goldsmith told independent commissioners Lyal Cocks and David Whitney.
''Where Queenstown and Wanaka is going I don't think any of us know ... but they [land buyers] are coming and they are building houses.''
He said PC45's approach was to enable developers and purchasers to make their own decisions about development density and the rate of uptake and the council should also be enabling, rather than restricting opportunities for people.
''Set the environmental parameters, let the people in the market sort the rest out ... the whole approach of carefully matching supply with demand is almost an alien approach ... the only purpose of drip-feeding land into the market can only be to maintain price.''
Increased supply was likely to lead to competition and lower land prices in Wanaka, which was a ''major potential benefit'' of PC45 not considered in Ms Jones' report, Mr Goldsmith argued.
Ms Jones' recommended development outcome would result in ''a nice place to live for a reduced number of people who can afford property at the wealthier end of the price range''.
The six-day hearing continues today at Edgewater, where Mr Goldsmith and a series of witnesses for the applicant will give further evidence.
