A failure by successive Governments to invest in affordable housing could mean as many as 200,000 Kiwi families - including 90,000 in Auckland - could be forced out of cities in search of cheaper homes.
And this so-called "Missing Middle" will not be rescued by KiwiBuild because the $650,000 cost for a three-bedroom Auckland home was out of their reach, Community Housing Aotearoa chief executive Scott Figenshow says.
He said a new report showed the housing crisis for these workers - who included teachers, nurses, police officers, administrators, baristas and cleaners - had been building since 1990.
It was then the Government dramatically reduced funding for affordable housing programmes and developments, the report by the Centre for Research, Evaluation and Social Assessment found.
This drop in funding meant that while more than 60 per cent of new houses built in the 1960s were affordable homes valued in "the lower two quartiles" of the market, by 2010 only 10 per cent were in the cheapest quartile.
"If the Government doesn't fund affordable outcomes, then they don't happen," Figenshow said.
"The market does not deliver affordable outcomes by itself."
His comments come as Auckland's housing market is now regularly ranked among the world's most unaffordable cities with many suburbs more than doubling in value since 2007's last market peak.
Prices in many other parts of the country have also jumped by at least 40 per cent.
Nurse and police unions have expressed repeated concern over the ballooning prices, while striking teachers recently sought an extra $100 a week housing allowance for those living in Auckland.
Such high prices had left about 200,000 Kiwi households caught between earning a low enough income to access state housing and a high-enough wage to afford to buy a KiwiBuild home, Figenshow said.
His figure was based on a Building Research Association of NZ study three years ago that found 181,500 working families across the country were currently renting and unable to afford to buy a "lower quartile" home.
More than 85,000 were in Auckland.
International studies also widely defined affordability as being when families spent no more than 30 per cent of their gross household income on either rent or mortgage repayments, Figenshow said.
"If a family or a household is paying more than 30 per cent then they will start to exhibit signs of financial stress," he said.
"That is when the problems start because the car breaks down or somebody gets sick and needs to take some time off work and all of a sudden the chaos of poverty kicks in."
Paying off a $650,000 KiwiBuild mortgage would likely push many families over the affordability threshold, he said.
In a bid to open the KiwiBuild programme to more families, state-owned bank KiwiBank recently said it would let customers borrow for the homes with only a 10 per cent deposit.
To further tackle the housing crisis, Figenshow appealed for the Government or councils across the country to introduce planning policies that require large developments to include a share of affordable housing as part of the build.
This so called inclusionary zoning had been successful in cities across the world, including New York, London, Vancouver and Melbourne, and had been working in the Queenstown Lakes District for 10 years, he said.
But two years ago when Auckland's major planning policy, the Unitary Plan, was being introduced, councillors voted against a proposed requirement for 10 per cent of homes in developments of more than 15 new dwellings to be affordable.
This was done at the recommendation of expert advisers from an Independent Hearings Panel, Auckland Council planning committee chair and councillor Chris Darby said.
"Reflecting on that – here we are coming up to two years on from that decision – I personally think that was not the right decision," he said.
"I'm of a mind that we need to re-examine inclusionary zoning."
He said the Mayoral Housing Taskforce set up under Mayor Phil Goff was currently looking at a wide range of issues to tackle Auckland's housing crisis in partnership with the Government.
This included examining the materials new buildings were built with to ensure their operating costs over the long-term were affordable and designing ways to ensure people had a choice of homes close to where their jobs, schools and friends were.
Housing industry consultant Leonie Freeman said inclusionary zoning was a good idea but it was important it was well considered and implemented so that it did not have unintended consequences.
She said that while a $650,000 mortgage might not be affordable for many, "you can't somehow just take $200,000 off the price".
She said it was important many "levers were pulled" to tackle housing affordability.
These included finding ways to lessen land and construction costs, speeding up the planning consent process and introducing new innovative products and increasing the capacity of the construction industry.
Either way, she said something must be done to tackle the crisis, pointing out how her teacher parents in the 1960s were able to successfully buy a house and raise three children.
"It was a real struggle and there was no extra money, but they could own a house," she said.
"I don't think two teachers today with three kids wouldn't have a hope in heck of buying a house."
A spokeswoman for Housing Minister Phil Twyford said the only KiwiBuild homes that would be at up to $650,000 in price were three bedroom or more in Auckland and Queenstown.
"The rest are selling for less than $500,000 for one bedroom and less than $600,000 for two bedrooms.
"It's important to note, these are maximum caps and many homes will come in under them such as the three bedroom homes at McLennan which are selling for $579,000.
The price cap for KiwiBuild homes outside of Auckland and Queenstown is $500,000.