New Zealand has been building enough houses in recent years, but not in the right places or for the right people, the Salvation Army says.

It has released a new housing report which notes that, over the five years to March this year, the housing stock grew 9.1 percent while the population only increased 5.5 percent.

"On the face of it, New Zealanders are becoming better housed but alongside this surfeit of new housing is another story of small increases in rates of overcrowding and housing-related stress," the report said.

"The central question for policy is not whether New Zealand has enough housing in total, but whether the right housing is in the right places at prices people on modest incomes can afford. Any credible housing policy will need to grapple with distribution, not just supply."

Report author Alan Johnson said building houses was not the same as housing people well.

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"This report shows clearly that the wrong people are getting the wrong housing in the wrong places. No party has yet given a convincing answer about what they intend to do about it

"Some of the housing problems we have are still questions of affordability despite the fact that rents seem to be falling in many places. Incomes, particularly for people who are either on benefits or working precariously, aren't sufficient to secure adequate housing."

He said developers were focused on producing homes to be sold on the private market, which put them out of reach of lower-income people.

Housing stock had grown fastest over the 2023-2026 period in Marlborough and the West Coast. Marlborough's housing stock increased by an estimated 15.8 percent. At the same time, the report estimated its population growth was 0.7 percent.

West Coast added 10.5 percent to its housing stock but its population lifted 3. 2 percent. Nelson increased its housing stock by 4.7 percent while its population increased 0.7 percent.

Johnson said 18 percent of new housing provided between 2019 and 2023 was unoccupied and could be second or third homes for wealthier households. Thames-Coromandel had the highest proportion of unoccupied dwellings, at 50 percent. Upper Hutt was the bottom of the table, at 5.2 percent.

He said housing indicators were improving in Auckland, where housing stock was up more than 6 percent over the three years, but other parts of the country were faring more poorly.

Rents had risen sharply in Gisborne, Taranaki, Southland and the West Coast. Social housing waiting lists relative to available stock were most acute in Northland, Bay of Plenty, the West Coast and Southland.

Johnson said it was likely that people moving out of Auckland in search of cheaper housing in other areas were gentrifying those areas, purchasing homes previously available to rent and reducing the rental housing supply.

"People are leaving Auckland and going elsewhere and possibly buying up the housing that was previously rented. We're seeing in some areas, particularly places like Gisborne and Hawke's Bay, a shrinking of the rental housing pool.

"I think this is not a new phenomenon, it's been happening in the last 10 years and the evidence of people leaving Auckland is quite clear, they're going to the provincial cities where housing is cheaper. That sometimes comes at the cost of people who already live there. I think that's a reasonably important trend that we need to reflect in our housing policies and particularly where we choose to build social housing."

He said there needed to be more investment in public housing,

"The Government needs to be building more social housing than it is. There was a legacy from the last government of a significant build and purchase of additional social housing units and this has waned quite considerably in the last year or 15 months.

"It's really the case that there will be many households that just can't foot it in the market and some level of intervention is required for them whether that's by way of subsidies through the accommodation supplement or direct provision through social housing. It appears as though there is a gap not being met."

About 1500 to 1600 homes were being added to the social housing stock each year, while applications were running at about 5500 to 6000 a quarter.

Johnson said Government spending on housing subsidies would hit $4.8 billion in the 2026/27 year. The accommodation supplement had declined in real terms by 14 percent per recipient over the past five years.

He said about 90 percent of the country's housing wealth was held by the wealthiest 40 percent of households.

Cotality chief property economist Kelvin Davidson said it was correct that building more houses did not mean everything was okay. 'It might just have lessened a previously huge shortage rather than removing shortages altogether.

"A little thing that we always highlight in our affordability reports is that even though the rent measures as a percentage of income look better recently they are only averages using median rents and median income. The typical household that rents might be paying a standard rent but have a below-average income, making their burden much tougher."