Housing agency Kāinga Ora had set aside 2-12 Albertson Ave for development into 12 state houses, but backed out of the project after a change of government and a commissioned review which said the organisation was carrying too much debt and not building enough homes.
The land was for sale for about a month until last week, but did not find a buyer before the sale deadline.
Kāinga Ora deputy chief executive Paul Commons said they would not give up their quest for a new buyer.
"Although it didn’t sell at deadline, the agency will continue to manage the sale on our behalf under a different sales method, with the aim of achieving a price that meets both our expectations and is in line with current market conditions.
"When we sell properties like this one, we are reinvesting the proceeds into extensively renovating and replacing our older state homes in locations that meet our tenants’ needs."
West Harbour Community Board member Duncan Eddy said he was pleased the land had not yet sold, but was worried about what could happen next.
"There could be a fire sale of an important community asset, at far below economic value.
"There is demonstrated strong local community and political support for the retention of this Port Chalmers social housing land.
"Kāinga Ora and Minister for Housing Chris Bishop need to do the right thing here, and withdraw the land from the market," he said.
Mr Eddy said opposition MPs Rachel Brooking (Labour) and Francisco Hernandez (Green Party) had visited the site, and renewed their commitment to building more state houses if they were elected to government next year.
Meanwhile, developer and philanthropist Roger Fewtrell, who plans to develop more than 200 affordable homes throughout the city out of his own pocket, said he had not thought too much about buying Kāinga Ora land as little of it had come online.
He ruled out purchasing Albertson Ave, due to issues with soil quality.
"The Albertson Ave site has lead poisoning on it.
"We know the story there, so nobody will want to touch that with a 40-foot pole. I don’t know what else they’ve got, really."
Another site not going ahead yet — although it is consented — was the 42-home development in Carroll St.
Mr Fewtrell expected the land to go on the market soon, but was unsure what sort of developer would want to pick it up.
"It will be a good one, but it’s probably too much and too big for me. Our biggest subdivision is 68 sections, but generally we quite like smaller ones where we can do 10 houses or something like that."
