Pirkko Nieminen and Kaarina Vauhkonen say Palerang Council, which bought their weatherboard home, ruined their lives and, unless stopped, will ruin Bungendore's heritage character.

The council says the women wanted to sell but asked too high a price.

Negotiating with grocery chain Metcash for a large supermarket, car park for 80 cars and six specialty shops, the council proposes shifting the heritage-listed home with sandstock brick chimneys, and demolishing one next door.

Around the post-and-iron verandahs and old stone bed-and-breakfast places, new development's impact is a hot topic.

Mayor Pete Harrison says the Malbon Street redevelopment will help consolidate Bungendore's commercial centre, create more jobs and encourage business growth.

Councillor Peter Marshall said demolishing a cottage and removing the other was a bad example for the council to set and created a precedent.

Two separate supermarket developments and a supermarket expansion are proposed for the rapidly growing commuter suburb of Canberra and stopover for visitors to the south coast.

Ms Nieminen and Ms Vauhkonen, village residents for 20 years, ran a giftware shop for 11 years and received council notification in December 2010, that No.12 would be included in a draft list of items valued by the community that were worth looking after for future generations. Later, when told of a council subdivision near their home, they decided to sell both 10 and 12 Malbon Street.

Ms Nieminen said from discussions and documents she had seen, it became clear if they did not sell No.12 to the council, the council would have acquired it compulsorily.

''They have ruined our lives. This was going to be our superannuation. We were going to work the little shop next door, and build a shed and have chooks out the back.''

Cr Harrison said council had intended buying the back portion of No.12, and did not have any use for the front but agreed to buy it to help the owners. The council did not want No.10.

''Council is, however, obliged to pay fair market price for any assets it acquires, and to also pay additional compensation if property is acquired compulsorily.''

Bungendore Wood Works Gallery owner David MacLaren said his business had difficulty accommodating visitors' cars in Malbon Street.

''The council has every right to do what they are doing, according to the LEP [Local Environment Plan]. It is sad for those concerned. I guess, the bigger picture, I am swayed by that.

''Things are changing here so rapidly in a lot of ways. In a lot of ways we have already sacrificed our heritage.''

Mr MacLaren started the gallery 30 years ago. He said these days more shops, services and diversity had improved the village.

Resident of 20 years Alix Burnett said: ''In Australia in 2013 you'd think we had gone past that 1970s era of bulldozing everything that is historic and try and hang on to what's left.

''Why would you get rid of the very thing that attracts tourists into Bungendore? No one is going to stop in Bungendore for a tourist destination if it's the same as Queanbeyan or anywhere else.''

Palerang is awaiting a consultant's heritage assessment of the two cottages, while residents are putting up signs to save them.