Auckland's deteriorating housing situation is outpacing the Government's ability to respond, John Key has admitted.
Rents have jumped 25 percent in five years, well ahead of inflation, and some families are paying almost $400 a week to live in a garage. Housing New Zealand has 4500 people on its waiting list.
"The situation is changing faster than our response is, so we need to keep coming up with new things; more cash and more availability," the Prime Minister told Paul Henry on Monday.
The Nation at the weekend spoke to a number of homeless people living in cars despite having jobs.
"It's terrible. I don't think it's acceptable," says Mr Key.
He says they should seek help from Work and Income if they haven't already.
"The Government has allocated already in this Budget $41 million for 3000 emergency places."
Those 3000 places are New Zealand-wide, not just Auckland, and the first won't be in place until September.
In the meantime, Mr Key says Housing NZ is trying to get people who no longer need subsidised accommodation into private rentals, and older tenants whose kids have grown up and moved out into smaller places, freeing up more family homes.
"When you go into a Housing NZ home...your circumstances change over a lifetime. You go in with a family -- it might be quite large. Like all families they grow up, leave home. People are stuck in those houses and we're trying to move them into private accommodation if they can afford that, or a much smaller place."
The Government has also introduced income-related rents for tenants of houses belonging to charities such as the Salvation Army.
"It costs the Government quite a lot of money, but increases the stock of houses," says Mr Key.