Two-thirds of motel space in Hawke's Bay is being used by seasonal horticultural workers and government emergency accommodation for the homeless, the Hastings District Council chief executive says.
There are 615 people in Napier and Hastings on Housing New Zealand's waiting list, and a shortage of 1800 homes, Nigel Bickle said.
He said about 440 children and their families will spend this winter in a motel in Hawke's Bay - one of the country's least affordable places to live.
Mr Bickle said some families had been living in motel accommodation for more than a year, which showed that it was no longer just being used as transitional housing.
Some families were moved around motels because Hawke's Bay is also a visitor economy, which meant children lost connections with their communities, schools and health care, he said.
He told Nine to Noon the government needs to give at least five years' certainty regarding the number of seasonal Pacific workers that will come to the region.
That way, he said, employers can invest in purpose-built accommodation, freeing up more housing for the homeless.
"So we've got 4500 temporary workers in Hawke's Bay, 1000 are living in purpose-built accommodation, basically 1200 are living in 300 homes in the region and the balance are all living in hotel rooms."
He said the region has had a huge increase in house prices and rents relative to the population's income.
Mr Bickle said the market will not deal with this problem and the only way to get people who are being forced to live in motels in to homes is through central and local government initiatives.
He said there needs to be short-term solutions to house those living in cars and other homeless people heading into winter.
The iwi social services group Te Taiwhenua o Heretaunga said its papakāinga housing model in Flaxmere has been hugely successful, but it needs more government funding in order to keep building new homes.
Mr Bickle said Hawke's Bay is leading the way nationally as far as papakāinga housing is concerned.
"The council enabled a district plan that allowed 114 houses to be built through the papakāinga scheme, there's a lot of potential to do more, but there is no papakainga funding available from government now.
"We think we could build another 50 to 100 houses over the short to medium term if there were papakāinga funding available."
As at the last quarter of 2018 Napier and Hastings had a combined 615 people on the Housing NZ waiting list, and a shortage of 1800 homes.