Updated 2.23pm: The government's ruling out giving away state houses for free, but admits they could be sold for less than their recorded value.

The chairman of Te Runanga o Te Rarawa has called on the government to GIVE iwi some of the social housing that's due to be sold off, saying it would prove National isn't treating the homes as an asset sale.

Finance and Housing New Zealand Minister Bill English says it's just a cynical attempt to talk the price down.

"That's why we run essentially a bidding process, it's to find out what the real value should be. These are all matters of degree, we welcome the interest of iwi."

Social Housing Minister Paula Bennett isn't keen.

"Well, I'm not surprised that people want a house for free. I'm sure there's a lot of people that would like a free house.

"We've got a process that we're working through with transactions."

Bennett says the houses are still likely to be a bargain.

"They're not going to get the book value. The book value's not the real value, if you like, of a social house with tenant in it, but we're going to work our way through a process as we like at the moment."

Bill English says that won't happen, but admits they'll likely be cheap.

"They're in places where the housing values are very low, they may be poor quality.

"For example, some of them have been used as P labs, and that makes them less attractive."