Speaking in the resort yesterday, housing spokesman Phil Twyford said fast-tracked special housing areas alone would not halt Queenstown's skyrocketing house price rises and the Government should step in.
Mr Twyford said the Government should work with the Queenstown Lakes District Council, the local Community Housing Trust and employers to build and deliver affordable rental housing.
He did not demand taxpayer money be used but did not rule it out.
"The current Government's strategy on housing, which I would describe as a narrow obsession with land supply, is not working.
"I think it's unlikely to work to deliver what people in Queenstown want and it's time for the Government to throw off its ideological blinkers and look at other approaches.''
Mr Twyford also said there should be a mandatory quotas for affordable housing in Queenstown's approved special housing areas.
Mr Twyford's comments come as renters' words reveal the depth of Queenstown's housing crisis.
Their anonymous comments are included in the Queenstown Lakes Community Housing Trust 2016 renters' survey, which highlights problems including crammed houses, bad insulation, cut-throat landlords and fierce competition for accommodation.
"We are living in a truck,'' one renter said. "We couldn't find anywhere to rent that would let you have pets and that we could afford. Winter is coming and I have 3-year-old twin boys.''
Another said: "I am homeless at 65.''
One employer said staff were living in cars.
Increasingly, rooms are being rented for visitor accommodation, leaving people to take what accommodation they can find. Some are said to be paying $210 a week, plus bills, to sleep in a garage.
Trust executive officer Julie Scott said the trust would be open to affordable housing joint ventures between public and private bodies.
"We definitely see the Government as having a role to play in assisting.''
The trust's biggest affordable housing development, a $15 million project at Shotover Country, has attracted a $650,000 GST bill, plus it has to pay the council $460,000 in development contributions.
The Government gave the trust a $1 million grant in 2013 to build 10 community social housing units in Arrowtown.
Asked if it was considering more grants, Housing Minister Nick Smith said the Government was open-minded about additional measures to address Queenstown's housing challenges.
"The Government's view is the primary reason that houses in Queenstown are ridiculously expensive is because the Queenstown Lakes council has not released anything like the amount of land, and approved the level of housing developments, to meet demand.''
Site-specific affordable housing quotas in Queenstown should be considered, he said.
Queenstown Lakes Mayor Vanessa van Uden said special housing areas alone would not solve the district's housing issues and the council was actively working with the Government and other parties.
"We also need to be looking at ways in which the benefits accrue to more than one generation of our community and how the market can be encouraged to provide rental accommodation that is available and appropriate for the long term.''
Steeply rising house prices in Queenstown, combined with some jobs offering little more than the minimum wage, has left many worrying about the long-term future of the town.
Between 2012 and this year, the average house price in the Queenstown Lakes rose more than a third, from $596,883 to $802,634.
