"It's been a problem," Major Roberts said. "We had so much profile in the media about doing this when in fact all we'd done is say it's something we'd look at in due time. Next thing, we found ourselves as the most likely people to be undertaking social housing."
Referring to the research, he said: "It's cost us a lot of money to do it, frankly. And if we spend a lot of money on something like this, we don't spend it on other things."
The Salvation Army's study has not been released, but Major Roberts said it showed that the costs of taking on the state houses had been hugely underestimated.
For the scheme to work, the properties would have to be sold at a discount of 25 per cent in lower-demand areas and up to 75 per cent in areas where housing was more limited.
Major Roberts said that "even at those [discount] levels, we face not having a cash surplus for over a decade".
This was because of the cost of maintaining the state houses, providing extra services to tenants, and employing specialists who could help manage a multi-million-dollar housing stock.
Community Housing Aotearoa director Scott Figenshow, whose organisation represented 74 housing providers, said the Salvation Army's decision was not surprising because of the $1.2 billion of maintenance required on HNZ's stock.
Mr Figenshow said providers were interested in forming a housing consortium which combined financial resources and skill sets, but they would need greater certainty about long-term funding from Government.
Other providers said they remained committed to taking part in the Government's sell-off.