Social Housing Minister Paula Bennett says decades of "poor asset management" by Housing New Zealand (HNZ) has resulted in a mismatch between tenants and homes.
Questions over the management of HNZ properties have been raised after it was revealed more than 2000 three-bedroom homes are being occupied by a single person.
The figures were released to Newshub by HNZ under the Official Information Act.
As of February this year 2320 three-bedroom homes were being occupied by a single person. That means around 4640 bedrooms have been sitting empty.
"Around 70 percent of demand in Auckland is for one-bedroom units, yet they make up only around 30 per cent of supply," Ms Bennett says.
"That's why we are focused on fixing this and why we have hundreds more one- and two-bedroom units in the building pipeline."
Labour's housing spokesman Phil Twyford agrees the under use of houses shows poor management by HNZ.
"It's a real inefficiency in the system that there are all those empty bedrooms.
"If the Government had planned properly and managed Housing NZ in a better way and built more one- and two-bedroom homes instead of focusing on trying to sell state houses all of the time, then we wouldn't have this problem," Mr Twyford said.
The very public social housing struggle has seen many families, including those with children, on the waiting list. The issue reached breaking point when it was revealed many families have been forced to live in their cars.
"The surge in homelessness that we're seeing with kids sleeping on the side of the road, with people living in campgrounds and garages, the fundamental reason we're seeing that's happening is we don't have enough state houses."
Currently there are 4500 applications on the social housing waiting list.
Ms Bennett says tenancy reviews were introduced in July 2014 to address current issues.
Ministry of Social Development staff have begun 4955 reviews of social housing tenancies.
"As a result, 572 households have moved into private rentals, 92 have bought their own homes and 117 have moved out for other reasons," she said.