"They were very lucky to get out - they had a working smoke alarm," he said.
"They just got out with what they were wearing - they lost everything. I have been told they have contents insurance which is pretty fortunate."
The children were safe on a neighbour's lawn when fire crews arrived.
The house was unsafe for firefighters to enter at first, he said.
"There were some issues with the tiled roof. They are very heavy and they do give way, but it didn't take us very long to get it under control."
He estimated 95 per cent of the house was damaged.
"We got the ambulance there as a precaution but everyone seemed to be okay."
A Housing New Zealand official was on site last night. Neighbours said the family were staying with a nearby relative.