Jennian will build the majority of the houses on the subdivision, and use local firms to do the civil engineering and surveying.
Manager Gareth Norris said feedback from real estate agents showed there was a shortage of new homes to meet demand.
"The economy is feeling more vibrant, there's more inquiry, more activity.
"It's given us the confidence to push on and do this."
The properties would be on sale in the mid-$300,000s, he said, adding he considered it comparable to buying existing homes.
"It's general purpose, quality housing, which we want to be realistically priced for the Masterton market."
The reserve was large, but necessary to help preserve the "rural" aspect of the development, Mr Norris said.
"If you put in 80 families, you are creating a little community.
"It's important for us to have space."
The company's target market is couples, families and retired, and also commuters who travel to Wellington.
"There's a lot of commuters, driving to Wellington, or going to Solway train station."
A walkway will connect to High St. Local firms Bruce Buchanans and AdamsonShaw were handling the civil construction and surveying, he said.
"It's really important to us to use local contractors."
Mr Norris said he felt "really excited" about the development and what it meant for Masterton.
"We have seen this coming, we do feel in the coming few years, the economy is going to be more stable.
"It's a really exciting thing for Wairarapa, the employment that it will create."
