The state housing agency confirmed that its plans to buy the site for housing development were no longer on the table.
Acting regional director Mel Park said "following an extensive due diligence process, Kāinga Ora-Homes and Communities is no longer considering a purchase of 656-658 Princes St in Dunedin".
"Since Kāinga Ora began considering a purchase of the Princes St property, costs facing builders and developers across the country have risen significantly and the economic environment and property market are now markedly different.
"We put in a significant amount of work to see whether we could produce a suitable plan for providing social housing on the site. However, none of the plans have stacked up for us."
The due diligence process was first reported nearly three years ago and the Otago Daily Times has asked Kāinga Ora for the cost of the process as well as copies of any completed plans for the site.
"We need to make sure we’re investing in the right places, at the right time and when we considered the infrastructure investment required to build social housing on the site, it became clear it was not viable for us to acquire the property," Ms Park said.
Dunedin Tramways Union secretary Philip Matthews said he was "pleased" the deal did not go ahead, but "still sad" about the fact they were still likely to move from the Princes St site.
"Things are still up in the air for us.
"It’s a city council building; they could still leave it empty for a while. Everyone would like to stay where they are, but that’s out of our hands.
"It’s an easy site for bus changing. There’s going to be a lot more work for the bus company [Go Bus] if they move to the proposed site at the former PlaceMakers site in Portsmouth Dr."
Go Bus business development director Russell Turnbull declined to comment further.
The city council has been approached for comment.
Ms Park said since July last year, Kāinga Ora had delivered 61 new homes in the Dunedin area.
"We also have about 190 homes under construction or in the pipeline to be delivered in Dunedin by the end of June 2025.
"These are located in Brockville, Bush Rd, Concord, Corstorphine, Green Island, Mornington, Mosgiel, Pine Hill, Port Chalmers and St Clair.
"We are particularly focused on delivering new homes in areas of the city that are well connected to amenities, open green spaces and these suburbs we are delivering new homes in over the next year tick these boxes."
A review led by former prime minister Sir Bill English suggested a total overhaul of Kāinga Ora’s operations.
Housing Minister Chris Bishop said while the review recommendations were being implemented, Kāinga Ora’s existing build programme remained ongoing and he expected it to deliver the social housing places it had already been funded for.
"A refreshed board is expected to be in place in July. The first task of the refreshed board will be to present a Kāinga Ora turnaround plan to ministers by November, which focuses on returning Kāinga Ora to financial sustainability and eliminating losses."
