The Minister responsible for Housing New Zealand, Bill English, says part of the reason for selling off more state houses is because many are not suitable for modern families.
The Government is set to proceed with its controversial plan to sell more state houses while expecting community providers and iwi to provide more social housing.
Bill English told Sunday Morning's Wallace Chapman that while there was not a set number of houses the Government wanted to sell, almost a third of the almost 70,000 houses it owns were no longer suitable.
"We have an over-supply of three bedroom houses from 50 years ago when that was the standard unit," he said.
"We have an under-supply of one and two bedroom houses because there are more single person households, and we have an under-supply of four and five bedroom houses because we have more big families in need."
Mr English said more housing on less land was needed to get more people into the homes.
But the Green Party's housing spokesperson Kevin Hague said there have been state houses standing empty as the waiting list grows.