A lack of surplus state houses could stop the South from being part of a plan to get Aucklanders languishing on waiting lists to leave the city.
The proposed Government policy comes as Housing New Zealand data released to the Otago Daily Times showed there were only 22 spare "ready to let'' state houses in Otago and Southland.
This comes after Social Housing Minister Paula Bennett said the Government wanted prospective Auckland tenants to consider moving to regions which had dozens of vacant state houses.
The policy would in some cases involve offering thousands of dollars in taxpayer sweeteners for Aucklanders to shift.
"We've really got to shift some of the thinking with those that are eligible for state assistance for housing,'' Ms Bennett said.
"And that means thinking more flexibly and looking at other areas of New Zealand that have got great employment opportunities and secure housing.''
She said Pacific Island tenants could be prime candidates for such a move and mentioned there was a "huge Tongan community'' in Oamaru.
However, Housing New Zealand data suggests Otago and Southland could not play a major role if the policy is approved by Cabinet.
A Housing New Zealand spokesman said that as of the end of 2015, more than 95% of its 2009 properties were occupied.
Of the 91 vacant properties, only 22 were "ready to let'', and the rest were not.
Properties in that category included those that were fire damaged, methamphetamine-contaminated, had significant building issues or were being left vacant because they were soon to be demolished or sold.
Waitaki District Mayor Gary Kircher said he was happy to welcome Aucklanders to the district, but only if they were coming for more than cheap housing.
"The thing we are cautious about is the regions being seen as dumping grounds.
"We don't want people coming down just because of cheap housing. We want people coming down here who are coming for jobs, for the lifestyle, and to participate in our communities and be involved economically and socially.''
A migration of Aucklanders to Waitaki was already occurring, particularly among Pacific Island groups, and many had told their families how much they were enjoying the new lifestyle, Mr Kircher said.
"They can afford to be here, they get the same pay without having to travel an hour each way to work, it costs them a third [of the price] for a house here and there's the wider benefit of lifestyle.''
He acknowledged state housing was limited but said that was not the only option.
"There is the availability of affordable housing, whether it be state houses, rentals or, potentially, buying.
"Anything they can do to get a family out of Auckland is one family less looking for state housing up there because that's all they can afford."
Ministry of Social Development data showed, as of September last year, there were 60 people on the waiting list for Housing New Zealand properties in Dunedin.
Asked whether the lack of surplus houses could prevent Southland and Otago from being part of the policy, Ms Bennett said: "We are currently working through the details and no decisions have been made about how much applicants could receive or which areas will be the best fit.''
In response to earlier questions, she said: "The Southland and Otago regions have so much going for them with great job opportunities and a fantastic lifestyle, and the Government wants to support anyone who wishes to take up the opportunity to move and contribute to your communities.''
