Housing Minister Nick Smith is calling the recent surge in homelessness a figment of people's imagination.

The minister refuses to call New Zealand's housing problems a crisis and says anyone suggesting the issue of people living in cars popped up overnight is dreaming.

"The idea that that suddenly happened in May 2016 is a figment of some people's imagination."

"These are long-term challenges."

Labour and the Greens both want the Government to stop charging Housing New Zealand a dividend and put it towards building new homes.

A recent investigation by The Nation found growing numbers of families are being forced to live in cars and garages because of unaffordable housing.

Government figures show rents for three-bedroom houses across Auckland have increased by 25 percent in five years, spawning a rise in garage rental accommodation.

Newshub spoke to a group of 50 social workers who said families living in garages is common, including one case of a family with two young kids who had been living in a garage for two years.

Some families are paying almost $400 a week to put a garage roof over their heads, and a social policy analyst says one in ten south Auckland properties has a garage tenant.

Many who can't afford a house are finding themselves having to take out loans from Work and Income NZ (WINZ) to pay for motel accommodation.

A petition will be presented to Social Development Minister Anne Tolley calling for WINZ to urgently forgive these debts.

Newshub.