Social housing tenants will drag down the price of private apartments if they're placed in mixed buildings, a major developer says.

Citta Property Group director Stephen McMillan​ told a parliamentary inquiry that placing social housing tenants in the same building with private apartments created a "much tougher job" for agents trying to sell units.

A public-private housing development in Carlton that the government is using as a model. Credit:Eddie Jim

"If each of the social housing apartments are sprinkled through a private dwelling there is no doubt that building would have to be discounted in the market," he said.

Mr McMillan, whose company is a prospective bidder on the government's social housing development program, said he would need to have a "hard think" if the government insisted on so-called "salt and pepper" developments combining public and private units.