UPDATED 10.19AM: State house tenants could face a fruitless search for a new place to live under greater scrutiny of their finances.

The government's more than doubling the number of state house tenancy reviews over the next two years - and tenants who can afford market rents will lose their state home to someone more in need.

But amid a shortage of affordable housing, New Zealand First leader Winston Peters wants to know where the government expects people to go.

"Booting more people down the road from state rental housing whilst you inflate demand from abroad means we've got a crisis that's only going to worsen."

"Ostrich-like behaviour from the government is not going to help."

Peters says a selldown fails to address the shortage of housing.

"Why the Prime Minister thinks that private provisioning will do the job is beyond me," he says.

"It hasn't done so in the last six years and there are no signs that the inflated demand against a very serious lack of supply is going to balance out."

Greens co-leader Metiria Turei believes the plan is softening up the public for more to come.

"Don't expect that this is the last and only proposal to sell off state housing, this is the first speech of a brand new term of parliament," she says.

"They have three years to sell considerably more and I expect they'll do so."

Northland Housing Forum's Tim Howard isn't buying John Key's plan either.

He says the housing sector doesn't have the capacity to deal with such a dump.

"The government agencies involved are totally in disarray right now," he says

"They're not set up as they're supposed to, to action this." 

"They won't be selling it from the government's side, I think "

Child Poverty Action Group spokesman Michael O'Brien thinks the government's trying to look like it's tackling the country's housing crisis, without doing anything.

"It almost gives the impression that something is happening when in fact very little is happening," he says.

O'Brien says the major problem is a lack of social housing, not who is running it. 

The Salvation Army is cautiously optimistic about the Government's housing plan.

The Salvation Army's Major Sue Hay says they could be interested in looking into the idea, and is commending the Government.

"We're very glad that the government is taking a cautious view of the number houses it intends to transfer initially so that the process can be reviewed and assessed," she says.

Phillip Davis, chair of Ngati Whatua Orakei Trust, says they're ready to take a more direct role in the housing space in Tamaki Makaurau.

He says providing safe and affordable homes is something the hapu is focused on.

Ngati Whatua has owned 100 homes in the city since 1996, leasing them to Housing New Zealand.