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Ashburton is picking up the overflow of Christchurch residents in urgent need of state housing.
It means some struggling Ashburton families may be in limbo as they sit on the waiting list to be housed in the district.
Housing New Zealand (HNZ) tenancy services regional manager Symon Leggett said seven Christchurch families had been rehoused in Ashburton during the past six months as the city faces a swelling waiting list of almost 500 people in need of state housing.
He said all the 186 HNZ properties in Ashburton were occupied, with 15 people on the local waiting list.
However, two houses are expected be become unoccupied in a few weeks.
An Ashburton family of six this week spoke of having to pitch a tent in the backyard of a friend's property because they cannot find a rental.
They are currently applying for a HNZ property, but were disappointed local families could miss out on homes in Ashburton to Christchurch residents. They were doubtful of securing a HNZ property because of their income.
A HNZ spokesperson said the organisation based housing families on their needs, with priority A being the most urgent, while people classed priority B were further down the list.
In Ashburton, four are priority A and 11 are priority B.
She said towns with "relatively short waiting lists'' like Ashburton were presented as an option to some needy Christchurch families.
"Christchurch residents would not be getting priority, it's all the same criteria. We look at factors whether someone is able to sustain, afford, and access accommodation in the lower quartile in the private sector, anybody who's not able to do that is likely to be eligible for a state house.''
She said the homeless family of six would likely be of high priority for a state house when they completed the application process.
Labour leader David Cunliffe said the over-subscription of state housing applications showed how desperate the housing crisis was.
"Particularly since the new LVR rations have shut first-home buyers out of the market. And all the while the government keeps floggings off state houses.''
- By Myles Hume of the Ashburton Guardian