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Developer David Grant said the house looked too good to burn from the outside, but the more it was looked into the more problems were found.
The Salvation Army had donated more than 100 couches and mattresses to help the firefighters train, as its biggest cost was disposing of unwanted furniture donations.
The site would be used to develop 39 new homes, he said.
Fire and Emergency New Zealand regional trainer and station officer Ed Oskam said the training would run over two days, today and tomorrow.
The controlled burn would allow firefighters to practise fundamental skills in a safe and controlled manner, he said.