Housing New Zealand is demolishing a multi-million dollar state housing complex in Onehunga because of leaky building issues.

Tenders are now being let to knock down 34 units at 64a Galway St, Onehunga, which is only 26 years old.

A spokeswoman explained that the complex, built in 1990, has had leak issues and is no longer fit for purpose.

"Therefore, Housing New Zealand has made the decision to demolish and replace these properties with a low to medium rise complex of one- and two-bedroom units - we will replace 34 units with around 70 new homes for people in need. This means we will not only better meet current and future demand for social housing, but that we will be making better use of our land," she said.

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One demolition expert who had examined the project said it was a shameful example of how the state had wasted money on leaky buildings.

Contractors were being asked to take the units back to their foundations, ready for rebuilding, he said.

The spokeswoman said the units were uninhabitable.

"The complex consists of 34 social housing units of which 12 are two-bedroom units and the remainder are three-bedroom units.

"Built in 1990, the complex no longer meets current and future demand for social housing (particularly in this location) as we are seeing more need for one- and two-bedroom social housing units.

"This site represents a positive opportunity for Housing New Zealand to develop more social housing in an area of demand - a core priority for us at Housing New Zealand."