The number of households who are assessed as in desperate need of public housing has soared from single digits into the hundreds.
These highest-priority applicants are also waiting months to be housed, when they were previously placed in a permanent home in as little as a week.
The latest data showed that while the record-high public housing waitlist was flattening, the sharpest end of the housing crisis continues to get worse.
Lifewise, which works with homeless people in Auckland, said just three people it managed had been given a permanent home in the last three years.
"We know the steady supply isn't there," said community service manager Peter Shimwell.
"Nearly all the homelessness is emergency and transitional [housing]. The permanent stock is just not available for our clients."
He said many of their homeless clients had been placed in motels or transitional homes during the Covid-19 pandemic, which had led to them being downgraded on the priority list.
"Therefore they fall through the cracks when it comes to permanent social housing solutions."
When an individual or family applies for public housing, their needs are assessed and they are given a priority ranking. The highest ranking is A20, which usually means a person is highly vulnerable, has dependent children, and may also have mental health problems or a disability.
Data released under the Official Information Act showed there were three people rated as A20 in December 2017, just after the Labour-led Government came to power. By December 2021, that had risen to 258. The second-highest category, A19, grew from nine people to 948 people over the same period.
While the highest-risk applicants were housed in around a week in 2017, they are now likely to be waiting months. The median wait time for a house for all priority ratings has steadily climbed to 182 days since 2017, though it dipped slightly at the end of last year.
MSD's general manager of housing, Karen Hocking, cited a number of factors for the growth of the waitlist, including difficulties in finding the right-sized homes for families in a suitable location.
She said families were finding it harder to find affordable rental properties and housing demand was exceeding supply. Covid-19 had worsened this trend, with lockdowns and job losses leading to more people seeking housing assistance. Data showed the number of A20s had accelerated since the pandemic started.
St Vincent de Paul building financial capacity manager Alanah Baker said there were also other, nuanced factors contributing to the waitlist.
Tenants were spending longer in transitional housing, and were occasionally reluctant to leave because it was closer to their community or it was better quality than homes being offered by Kāinga Ora.
"People will turn down house after house after house," she said.
Kāinga Ora (previously Housing New Zealand) has increased the number of state houses after a net loss of state housing under the previous National-led Government. But it cannot keep up with demand. It has increased the net public housing stock by 9000 since June 2017 and the waitlist has grown by 20,500 in that time.
The building sector is close to capacity, which means the Government has sought new options to house people on the waiting list.
Among the options being tried are progressive home ownership, which uses schemes such as rent to buy and shared ownership. However, that is relatively small-scale, housing around 200 families so far.
The Government also leases properties off private landlords or councils (known as a redirect) but it has reduced this practice out of concern that it was not increasing overall stock.