The number of people on the waiting list for community housing in Dunedin reached 272 at the end of September, an increase of 27 since July.
Of those, 159 people were considered priority 1, meaning they were over the age of 55, on a low income or below the asset threshold.
The Otago Daily Times understands the historic Loan and Mercantile building in Thomas Burns St in the wharf precinct, is being considered as one option to provide housing.
The Dunedin City Council referred questions to the owner of the building, Russell Lund, and the Salvation Army.
Mr Lund declined to comment, other than to say there were "exciting things happening".
Salvation Army social housing national director Greg Foster said the Salvation Army was in contractual discussions with the Ministry of Housing and Urban Development (HUD), which would determine whether the project went ahead.
An HUD spokeswoman confirmed it was in talks with various providers, including the Salvation Army, to source housing supply in Dunedin.
There were 218 people on the housing register in Dunedin at the end of June.
Demand for public housing and emergency housing assistance continued to rise, driven by issues including a shortage of housing, population increase, homelessness and insecurity of tenancy, she said.
The majority of those wanting community housing in Dunedin were seeking one or two-bedroom homes.
Dunedin City Council property services group manager Dave Bainbridge-Zafar said a report would be presented to the council in December outlining recommendations for the future of housing based on a review of its social housing policy and social housing strategy.
"This recommends a raft of actions from both local and central government and developers ... These will look at options for the future."
The council’s investment at present was in improving existing community housing units, he said.
Units at the Palmyra housing complex in Melville St were being upgraded and were expected to be completed by 2022.
Work had also started on redeveloping the School St housing site.
"Healthy home improvements, such as new insulation and ventilation, are being made at all of the council’s 936 housing units," he said.
