The claim came as mainly social service groups gave their views on the council's social housing policy to a hearings committee of Crs Fliss Butcher and Dave Cull, and Mayor Peter Chin.
The committee was also told a more co-operative policy in tandem with the Government and other providers was necessary, though that idea was debated.
The strategy, released earlier this year, had objectives including improving the quality of, and access to, housing, and concluded there was a need to increase the number of units.
Age Concern social worker Marie Bennett said the criteria for housing needed to be tightened, as people who did not necessarily need social housing were getting it.
People with greater needs were missing out to people who could afford private rental, and the meeting heard there were some who sold their houses, kept their money hidden and got a council flat.
Asked after the meeting how many such cases there were, she said she could not give numbers, but she and other social workers came across people in council houses who had "quite a lot of money".
"You have to wonder how on earth did they get a flat?
"We believe it should be for those in need."
Abbeyfield New Zealand chairman J. B. Munro said a co-operative approach was needed. That could include co-operation between the council, the Government, and voluntary agencies.
He said the provision of housing was disjointed, and challenged the council to help form an over-arching organisation, or trust, to bring the various organisations together to manage housing throughout Otago.
Others supported the idea, though some had reservations.
Grey Power Otago president Jo Millar said she was concerned about the idea of the Government taking over social housing, as she felt Dunedin would lose out to cities further north.
Geraldine Tait argued the council should retain control of its housing, as different governments would have different policies on the issue, meaning an unstable situation as governments changed.
Co-operation was "a nice ideal", though not something that would work.
Just Housing Otepoti's Denis Povey said there was a case to argue the status quo was not going to serve the city.
He called for the housing budget to remain, as housing was as deserving of profit the council received as other activities.
Presbyterian Support Otago chief executive Gillian Bremner said the council's vision for housing could not be completed by the council alone.
The council's housing performed an important function, and she called for affordable rents for older people, and a partnership with groups like hers to provide social support for tenants.
Methodist Mission's Laura Black said she supported the council's objectives, and recommended the council advocate for closer co-ordination between relevant agencies, and for a single point of contact for the "confusing array" of providers.
Pact chief executive Louise Carr said there was a perception in the community the council was only interested in money, not people.
A report from the committee will go the the council's community development committee.
