The gap between the number of state houses and the families that need them continues to grow, as rents escalate beyond reach. Kirsty Johnston reports.

Every lunch break Ani Hill would get on her work computer and look for a house to rent.

Every evening, she would take her three babies to the library and use the free Wi-fi to scroll through the listings.

Every weekend she would go to viewings, dragging the children with her, promising they could go to the park afterwards.

Every time for more than a year she was knocked back.

"It was unsuccessful, unsuccessful, unsuccessful," Hill says. "I would ask the property managers why and it was because I had a single income and three children. Even though my income was stable, they just looked at the kids and said 'no'."

Hill, 32, moved to Auckland last year for a job in early childhood education. She planned to study while she worked, to get qualified. Her husband had left her when she was seven months' pregnant with her youngest child and she wanted to begin again - in a new city, with a new life.

She didn't want to be homeless, but it crept up on her anyway. At first, Hill stayed at a run-down lodge in Otahuhu, in a single room with her and the children all in one bed. The cooking was on the ground floor in a shared kitchen, groceries and baby lugged up and down stairs. It was supposed to be temporary, but it dragged on for three months, then six months as Hill was unable to find a home.

Ani Hill said property managers looked at her income and her children and refused her applications for a rental. Photo / Dean Purcell

In December last year - after a nasty argument with her ex-husband that had neighbours calling the police - Hill moved to emergency housing run by the Mangere women's refuge Te Whanau Rangimarie. The case managers there helped Hill put her name on a waitlist for a state house.

She continued looking for a rental - applying for 30 homes in 10 months. In that time, other families came and went from the refuge. Hill stayed. Because she had a job, because her children were healthy, she wasn't a priority for the state. But the private market didn't want her either. Hill's new life was put on hold.

"Women like that - motivated women with no debt, they can't get anything from the government," says Patience Stirling, Te Whanau Rangimarie's social practice manager.

"There's no light at the end of the tunnel for them. We have some mums who wait so long that in the end they end up going back to what they've come from. Overcrowding, kids getting sick. Violence. It's not fair."

'We have families coming to us who have gone in to debt to pay rent'

Families like Hill's are New Zealand's new homeless - those who should be able to find and afford a place to live, but can't.

Ministry of Social Development statistics show a quarter of the 6500-strong state house intake last year came straight from private rentals. The bulk of the rest came either from emergency housing - or from overcrowding, garages, caravan parks or even tents - most with children, all feeling the burden of shame.

"We have families coming to us who have gone in to debt to pay rent," says CEO of the Monte Cecilia Housing Trust Bernie Smith.

"Most of them are working and have their lives together but because they're on minimum wage and rentals have continued to escalate to the point where they're paying rent equivalent to a mortgage payment - they're unable to manage."

Monte Cecilia chief executive Bernie Smith is pleading with the government to listen to housing charities. Photo / file

Data shows New Zealand now has the highest house prices relative to income in the OECD. During the past 30 years, underinvestment and poor planning have led to inadequate supply and choice. Property owners have largely flourished in such conditions, but those on the outer did not. As house values climbed, home ownership rates dropped.

In a kind of grotesque parody of trickle-down theory, those who were once destined to be owners ended up renting, and those in affordable rentals found themselves struggling to cope. Eventually, as the dire undersupply of homes began to bite, low-income families were priced out of the market - but because of a parallel underinvestment in the public system and the resulting shortage of state houses - there was no safety net to pick them up.

Each quarter, housing data shows the number of families needing help to pay for accommodation grows. At last count, 13,500 households were on the state house waitlist, and about66,500 families in state housing (defined as living in a public housing placement and receiving the Income Related Rent Subsidy, a form of housing support).

More than 3000 families are living in emergency housing, largely motels.

Additionally, about 40 per cent of the private market now receives a housing subsidy, such as the Accommodation Supplement, a rental top-up paid to landlords.

According to Treasury, demand for assistance will only continue to increase, as the national average asking price for rent creeps above $500 a week. Many of those in need will be low-income families - 1 in 5 of those on the supplement now are working households - but it will also include burgeoning numbers of retiring baby boomers who have not bought property and cannot afford rent.

"Current retirement income policy settings were developed in a time where most people retired with debt-free home ownership and when there was adequate provision of social housing to cater for those who had not achieved this," the Government's 2018 housing stocktake reads.

"These conditions are long gone ... and there is a growing risk that we will see more and more older people living in housing-related poverty."

State house numbers are now the lowest per capita since the 1920s. Photo / File

The consequences of long-term underinvestment are being flagged - repeatedly - at the highest level.

In briefings to incoming Housing Minister Megan Woods, Treasury officials warned the annual housing assistance bill each year was $3 billion and rising. Auckland's housing shortage was "stressed" by an undersupply of at least 40,000 homes, with rents climbing faster than wages - and no end in sight.

"[We] expect house and rent prices to continue to increase over time, creating increased hardship, homelessness, public housing demand and fiscal costs," Treasury said.

Further briefings from other agencies outlined flow-on effects expected if supply issues were not addressed. The ministries of urban and social development wrote starkly of how a dysfunctional housing market entrenched the transfer of wealth from younger and less wealthy people to existing landowners, who were generally richer and older.

It created inequality, they said, which contributes to wider social and economic costs, like overcrowding and homeslessness. Crowding wrought disease, and affected school performance. It created financial stress, leaving low-income households without enough money for food, clothing or medical care. It affected productivity and labour mobility, they said.

Treasury concluded its report with: "Housing assistance cannot address housing need across the spectrum in the current housing environment."

It urged Woods to focus solely on building public housing, and enabling other housing supply.

"You can introduce other priorities after the acute need for housing is met."

'We have given up many decades of progress'

New Zealand's state house stock relative to population is the lowest it's been since the 1940s. Where just 10 years ago, there was one state house for every 65 people, there's now one per 80.

Data shows the impact of the sell-off under the previous National government - down a net 1500 houses.

The coalition Government says it wants to reverse that trend - adding 6400 homes by 2022 to take the total stock to 73,000. Most of those are in our biggest city, part of large-scale redevelopments known as the Auckland Housing Programme.

Housing New Zealand are replacing stock across Auckland, including in Owairaka, Northcote and Mangere, as part of the Auckland Housing programme. Photo / File

It is so far ahead of target, thanks largely to a raft of homes built by community housing providers and added to the public books.

However, Herald analysis found even if the Government can keep up the pace, 73,000 places will in no way be enough. By 2022, if demand continues to grow at the same rate as now - about2000 a year - at least 84,500 families will need homes.

If that seems complicated - and state house data is unreasonably complicated - the main equation is simple: if you're only adding 1600 homes a year but demand for houses is growing by 2000, you are not going to catch up.

And even if the waitlist doesn't grow - which seems almost impossible - it will take eight years to house everyone currently waiting a home.

"The need is just so great, but the politicians still aren't getting it," says Monte Cecelia's Smith.

"Where is the sense of urgency? This Government banged on a lot that the National Government didn't recognise it as a crisis but now they're an elected party, where is the action?"

Economist Shamubeel Eaqub says he believed state house numbers needed to increase by 50 per cent at least. He had also analysed state house figures and says any way you looked at it, the stock hadn't been kept up.

"We have given up many decades of progress. At least this government is looking to increase stock but in reality their ambition needs to be much bigger," he says. Eaqubsays more radical changes were needed to enable mass supply.

"If we don't do something about state housing now we are in deep trouble."

Economist Shamubeel Eaqub has studied the state house data and says a huge investment is needed. Photo / File

The Government's plans for creating widespread change centre on forthcoming legislation - an Urban Development Bill that will allow new housing mega-agency, Kainga Ora, to lead "complex" urban development. It will enable broad planning and funding powers to be used for specified projects, in the hope of building faster.

The bill is yet to make it to Parliament, but Treasury's briefing gave an indication of where the Government might head. It advocated for a radical shift, saying Kainga Ora would need to be able to zone land and supply infrastructure - both in urban and rural areas. It suggested the agency be able to deploy consenting, capital and financing, to create targeted rates and to put binding conditions on developers.

Councils would be resistant, it said, but that could be mitigated with things like infrastructure standards and protections for special areas from development. A more permissive approach was needed, it said, or prices would continue to increase.

"This will require changing council's choices (through persuasion and incentives)... or bypassing them (through devolution and/or centralisation of functions)."

Housing Minister Megan Woods says Kainga Ora would only be able to rezone land when doing specified projects and it would be subject to checks and balances, including public consultation. It would not be able to approve consents for its own developments, but instead the decision would be made by an independent party.

Housing Minister Megan Woods says this government is building more state houses than in the last 20 years. Photo / File

She says although there was no single solution to the housing crisis, this Government was being honest about housing need, and was making "significant and meaningful" changes for families looking for secure homes.

Woods says the Government is building more state homes than at any time in the past 20 years, with 2500 public houses under construction. She says if National had built at the pace she was aiming for, there would be an additional 14,400 homes already - the entire waitlist gone.

"It's heartbreaking to think that this problem could have been completely avoided," she says.

'It taught me to be more grateful'

For Ani Hill, the dream of a state house is largely over. This month, through a friend of a friend of a friend, she was offered a private rental, at the cost of $480 a week. After phoning Housing New Zealand and discovering the wait would be at least two years, she decided to take it despite reservations.

"You can't pretend it's a nice house. It's so patchy, holey, and there was rubbish everywhere but I said, yes I want it. I can make it nice," she says.

The cost is a huge burden, she says. When the Herald called her on a Saturday, Hill had $8 in her bank account to last until Tuesday.

"I feed my kids and then I eat their leftovers. I would like to go out and have a nice dinner or have people over but the reality is I can't right now."

"I'd still love a state house but there's other people that need it. I just want less rent," says Ani Hill. Photo / Dean Purcell

But, Hill says, things could be worse. She learned a lot living in emergency housing - she made friends, learned to be herself again, grew stronger.

"There was one lady at the refuge, she had cancer. When I met her I thought, why am I complaining? We have a roof over our heads. It taught me to be more grateful," she says.

"I'd still love a state house but there's other people that need it. I just want less rent. I don't want to work and have nothing, that's just dumb."

When Hill moved out of the refuge, there was still one girl in the house. She rings occasionally to see how she is. At her last call, the woman was still there. She said: "It'll be okay, it will work out". But Hill doesn't know how long her friend will be waiting.

Read the documents referred to in this story below