Mattress and bed giant Sleepyhead say the big smoke of Auckland is constricting their growth so have decided to buy up in the Waikato and build a town for their workers.

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The north Waikato town of Ohinewai will be the new home to the bed giant, along with hundreds of its workers.

Using 176 acres of rural land, the self sufficient space will house 3000 residents in 1100 homes.

With an average asking price of under $500,000, the company says houses will be affordable enough for staff.

The project will create 1500 new jobs at Sleepyhead alone, with more expected to come from development and growth in the area.

A billion dollars is a big price tag but it's money the company would rather spend creating the town because they say the big city has priced them out of the market.

Waikato District Mayor Allan Sanson says it’ll create a lot of opportunity for the area.

"This is a big shift in a district, in relation to opportunity first, employment secondly and also a chance for people to get into affordable housing," Mr Sanson says.

He says he’s been working with the owners of Sleepyhead for the past 12 months and the family behind the name wants to help people into their "Kiwi dream" home.