Nearly half of those living in such environments are in severely crowded homes and most are Pasifika families.
Sara* lives with her five children in a living room at a house in South Auckland, with another six people.
"It's not nice, it feels uncomfortable, everyone passing through there. You'll be sleeping and there's people still walking around," she said.
People staying in the garage of the house drink and smoke, she said, which makes her feel anxious for her five children under the age of 7 years old.
"It's very stressful and I don't get any sleep because I'm paranoid. I just wanted somewhere safe for us, but I have nowhere. So we have no choice but to stay in the lounge."
Sara has been on the social housing register since Christmas, but nothing is available.
With the lockdown in place, her confidence she'll get a home soon has dropped further.
"I called housing and they said to call Work and Income, and they said they can't help until the lockdown is over. I even called Monte Cecilia Housing Trust and I'm on their wait list as well."
Sara said the people she lived with want her family to move out, but her only other option was a garage, with a door that doesn't fully close, at her sister's overcrowded house.
"I'm not worried about me, it's my kids. We would have to see if my sister can let me stay in the garage. But it's cold, we're getting into winter now. And her garage is basically half full, so we'd be squashed."
Jenny*, her husband, and their two children share a bedroom in another South Auckland house with five members of their extended family.
Jenny's husband is a roofer, but work has stopped because of the lockdown.
They've been living in overcrowded housing for a year, and the lockdown is making it more stressful.
"Living together is hard, it's really stressful sometimes. We are living with my brother and we argue sometimes because of the kids."
Jenny said her kids were often getting sick and needed more space.
At least 400,000 people are living in stressful, overcrowded homes. Photo / RNZ
"We are on the [Kāinga Ora] register for nine months now, and called them but haven't had any help. We've applied for private rentals but haven't heard back. It's hard."
"When you're cooped up, struggling in some cases to get food, others have been made redundant, and children are getting sick of the same-old same-old, this adds great stress."
Smith said getting more food parcels and financial support to people will help but ultimately, houses need to be built.
He said it was frustrating that work on 60 units the trust was building for families had ground to a halt because the suppliers and contractors were deemed non-essential.
He understood the need to limit the Covid-19 spread, but said there could be ways to safely continue work on much-needed housing.
"When you see over on the East Coast fruit and vegetables being processed and people still being kept 2 metres apart - why can't the process be applied for essential services to provide essential services that we need?" he said.
Smith commended the Pasifika community for sticking to the lockdown rules and says despite a large number living in overcrowded housing, the statistics for those contracting Covid-19 remained low.
The Government had filled nearly 500 motel units with people living rough or on the street since the lockdown.
Housing Minister Megan Woods said it was working with providers to reach people in all situations.
"If there are immediate health concerns, in terms of someone in the household being diagnosed or suspected of having Covid-19, there are a number of solutions that can be looked at through the temporary accommodation service," Woods said.
"There isn't a priority list. In terms of keeping people warm and well, we've been working across all those categories since we started bringing these motels in."
The Ministry of Housing and Urban Development said it was aware there was an increase in overcrowded housing, as whānau returned home for the lockdown.
It said it was continuing to support community housing providers and, as the lockdown response changes, would look at longer-term, sustainable housing.
"We will establish what is required to meet the needs of whānau, particularly in inter-generational households with multiple people living in close quarters - overcrowding; and where any community transmission of Covid-19 will pose an increased threat."
