"We don't have enough rental stock here in Rotorua... the only thing we'll be stockpiling is all our homeless people until those houses are made available."
Peiffer said the problem was hidden, often seen in overcrowded homes.
"You have three families in one home. That's more than 21 people... they don't recognise those other two families are homeless... they're doing everything right but their home got sold."
Her husband, Elmer, said it was promising to have Government support to get the Housing First initiative off the ground.
While he predicted the programme struggling in the beginning due to the lack of available housing stock, it could be successful.
Professionals McDowell Real Estate co-owner Steve Lovegrove said the "mounting issue" had nothing to do with income but the number of rental properties available.
This was due to investors selling their properties because the market was no longer desirable.
This, along with more people than houses, had forced rent up.
He said the slow-to-respond supply of homes would put families who could only afford to rent out on the streets.
"As a society, we have to provide houses... We have to be socially responsible about that."
A Ministry of Housing and Urban Development spokesman said in the quarter ending December 31 last year there were 177 applications on the Housing Register, up 11 from the previous quarter in September.
The Public Housing Plan will deliver an additional 85 public houses in Rotorua and 275 in the Bay of Plenty by 2022, he said.
He said the Ministry contracted transitional housing to support those with an immediate housing need, providing warm, dry and safe short-term accommodation.
As of the end of last year, there were 109 transitional housing places in Rotorua and 264 the Bay of Plenty region.
Work and Income regional commissioner Mike Bryant said homelessness affected people from all walks of life and there were full-time working families in Rotorua who were helped with transitional and emergency housing.
"When we interview people about their housing situation we also check to see if there is anything else that they might be entitled to," he said.
Rotorua Lakes Council strategy group manager Jean-Paul Gaston said there was a range of housing issues in Rotorua, one being homelessness.
He said the council supported the work of the MSD and its partners and previously showed support of the MSD's Housing First programme as a potential long-term solution.
"Council continues to work closely with Housing NZ to try and increase social housing stock in Rotorua."
He said the council worked closely with landowners and developers to firstly facilitate the opening up of more land for housing development and to work through consenting requirements.
However, with all potential developments, more housing was dependent on landowner and developer decisions to proceed, Gaston said.
