State tenants who turn down the offer of a house without good reason could soon be dumped from the waiting list.

In the year to last October 4155 people on the waiting list turned down a house, Social Housing Minister Paula Bennett told a housing policy forum at the National Party annual conference on Saturday.

Of those, 498 or 12 per cent turned down houses without good or sufficient reason.

"What often happens is that someone almost gets their circumstances to such that they are eligible to go on the waiting list, and they do it because they want a particular house," she said.

So they would decline houses until the one they wanted became available.

"That might be all right when the list is very short, but when you've got literally thousands on it you are potentially taking opportunities away from other people, and I don't think that good enough.

Bennett told delegates that 12 per cent turned down houses three or more times, but figures provided by her office showed the correct figure was about 7 per cent .

Those who turned down a house could drop down the priority "bands" that Housing New Zealand operated.

"They are not as desperate as they might have been if they are at the top of the list."

Some declined a house for good reason, such as wanting to keep their children in the same school.

"But there are ones that decline and they don't have a good reason and I don't think you can keep doing that and stay on the wait list."

She said they would get one warning after turning down one house and then face being taken off the list.

Other reasons for turning down a house included unsuitable fencing, poor exterior condition, the house's history, a busy road or bedrooms that were too small.

In two cases, applicants turned down seven houses.

There were about 4500 on the waiting list at any one time of which 1200 were "transfers" - people who were in a state house but wanted to change houses.