Labour leader Jacinda Ardern has announced Labour will build 149 houses on vacant plots in Palmerston North for first-home buyers.

Ardern made the announcement at the city's Farnham Park to a crowd of about 300 people.

The homes would be under the party's KiwiBuild policy to build 100,000 affordable houses nationwide - half in Auckland - over 10 years.

"We will be selling them at cost so first-home buyers have a chance to get in the market and those on the state housing list get a warm dry home.


"Housing affects everything, absolutely everything."

She said homelessness in Palmerston North was at about 500.

"We should never tolerate homelessness in a country as prosperous as ours."

Later she was asked if that would include housing for refugees - Palmerston North is one of the hubs for refugee arrivals.

She said she expected they would be part of the numbers on waiting lists.

She ran through other policies, saying Labour would ban foreign buyers and close tax loopholes for speculators.

Ardern also told the the crowd one unexpected issue has resonated during the campaign - mental health.

She said mental health was critical for well-being and Labour would look at pay equity for mental health workers the government had left out of the recent settlement for care workers. The party would also ensure every school had a nurse, she said.