A $6.5 million social housing development could be built in Hornby as the city council scrambles to address Christchurch's accommodation crisis.

The Christchurch City Council's social housing waiting list has grown to 227 since the February 2011 earthquake, with 88 of those considered in urgent need of accommodation, a council report says.

The council's social housing stock took a hammering in the February quake, with 380 units uninhabitable and 86 of those in three complexes inside the red zone.

A plan is being developed to fix the council's housing network, but the council report said it would be some time before this gathered momentum.

The report, to be considered by the council on Thursday, recommends that the council build 35 one or two-bedroom units, a residents' lounge and a village green on land it owns between Main South Rd, Goulding Ave and Shands Rd. The development borders the council's Hornby Courts social housing complex.

The $6.5m cost of the development would be funded through insurance.

The project would help to replace the council's housing units and meet the rental housing needs for people from the lower socioeconomic sector, the report said. If approved, the development could be ready by September next year.

If the proposal was accepted, the council would have to decline a rival bid by a housing consortium to buy the land and build 42 units catering for low to medium-income residents.

In 2009, the council decided to sell the land for the provision of social housing, but in June last year it revoked that decision in favour of retaining the land.

Last month, a consortium comprising the New Zealand Housing Foundation, Abbeyfield, the Housing Plus Charitable Foundation and the Salvation Army submitted a proposal to buy the land for $525,000.

The consortium wanted the council to lend it $420,000 in the form of an interest-free mortgage, which would be repaid over five years. A market valuation of the land assessed its value at $1.3m.

The report said the consortium's proposal asked the council to sell its asset at a discount of $798,000 and in addition incur $142,000 of interest costs.

Cr Glenn Livingstone, chairman of the council's housing and community facilities committee, said the city would end up with a social housing development whichever way councillors voted on Thursday.

Tenants Protection Association manager Helen Gatonyi commended the council for taking responsibility for social housing in the city.

"The city council is really leading the way, ensuring they retain the housing stock."

She said more needed to be done to house people in the short term.

If the council decided to develop the land itself, it would ensure the housing would remain part of the social housing network, she said.

- © Fairfax NZ News

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