The ACT government had been in negotiations with Braturn Pty Ltd to buy the Northbourne Flats public housing sites after a tender was released last year.

Australian Securities and Investments Commission's registers show Canberra property developer John Russell and Canberra Sand and Gravel's Wayne Gregory are the company's directors. Mr Russell developed the Malabar apartments at Dickson.

The Canberra Times understands Geocon and JW Land also put in a bid for the blocks.

But a government spokeswoman confirmed the tender process had ended without a sale, after the preferred tenderer could not meet the territory's reserve price for the block.

Sales agent, Colliers International's director of residential Shane Radnell said while the preferred tenderer's proposal was "exceptionally well received" by an expert design panel, the price they wanted to pay was well below the reserve.

"The design was outstanding but they were unable to increase their offer enough to be accepted," Mr Radnell said.

The territory's planning and development laws prevent the government from selling the block for less than the market value.

Suburban Land Agency chief executive John Dietz said while the proposal was "impressive" the reserve price reflected independent market values.

He said the decision to end the tender proved the government was committed to achieving a high-quality outcome for the sites.

"The outcome is one that continues to seek quality for the Northbourne Avenue corridor as priority," Mr Dietz said.

"ACT residents should expect to get a fair price for the sale of public assets and we believe that a good design and a good return can both be achieved."

The sites, which straddle Northbourne Avenue and are in the suburbs of Braddon and Turner, were part of a tranche of public housing being sold off by the territory government to cash in on the Commonwealth's asset recycling scheme.

However Mr Dietz said the ACT had already met its cap under the scheme, so no payments would be missed as a result of the lapsed sale.

City Renewal Authority chief executive Malcolm Snow said last June the sites were being released together "because they need an integrated design that unites the two sites as a cohesive precinct that welcomes people to the heart of the city".

He also said a tender was used as it "allows us to judge proposals based on design and build quality as well as price", but also made it "easier for national and multinational companies to prepare bids".

Mr Snow said on Tuesday the Suburban Land Agency and the City Renewal Authority would develop a "new, well rounded process" to sell the sites.

"Braddon and Turner on Northbourne provide a very significant opportunity to create something very special that Canberrans can be proud of," Mr Snow said.

"We want to see development that is attractive, has high-quality public spaces, has a rich social mix, provides significant public benefit and contributes to the activity and vitality of the precinct."

The sites - which are a combined 38,979 square metres - are zoned for mixed use high-density development, and can be developed into a maximum of 886 dwellings.

Tenderers had to produce a masterplan for the area that reflected the winning design of a public competition held in 2011.

They also had to comply with new building heights, setbacks, apartment sizes, ceiling heights and facade designs after new rules were brought in for the Northbourne corridor by the National Capital Authority.

And while the sale also included a condition that prospective bidders would be "encouraged" to include some sort of affordable housing, there is no mandated requirement under the government's Affordable Housing Action Plan on the sites.