Tokoroa houses are so affordable that a new type of housing crisis is emerging, with locals having to resort to caravans and garages as out-of-towners scoop up the hot properties.

""People are doing all sorts of things to try and get through. There are people with two or three kids having to live in caravans, in garages, or they are doubling up with families which is causing overcrowding," Salvation Army lieutenant Steve Molan told Fairfax.

"It is affecting everyone whether it is parents with kids, single people, or couples. There are just no houses in Tokoroa. Tokoroa is in a crisis," he said.

The blame mostly falls on out-of-towners buying cheap properties in Tokoroa, where you can now buy a property for an average price of $209,480.

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These purchases are also making rent prices shoot up and the Salvation Army, as well as other social agencies, are struggling to help.

According to Taupo MP Louise Upston, the government is working to fix the issue but she adds it'll take some time.

"I would urge people to visit Work and Income to see if help is available to secure accommodation in the area if they are having difficulties," she said.

To raise awareness, the Salvation Army is organising the 14 Hours Homeless Appeal, a sleep-out event outside the Tokoroa Church this Friday, October 13, from 5pm.

People will be sleeping rough for the night to draw attention to the housing crisis in the area.

Donations can be made into 020464 0146032 00, suffix 14HH. They will go towards helping those currently in emergency housing get settled into a new home.