A state house in Queenstown has been auctioned today for $665,000, after Housing New Zealand decided it didn't need it.

The move has been attacked by community groups, who say there is a waiting list of more than 300 people looking for social housing in the town.

Housing New Zealand bought the two-bedroom house, with mountain and lake views, for $265,000 in 2003.

Today it sold for $665,000 to a private buyer.

Housing New Zealand says it has only two people on its waiting list.

Karen Stuart, who runs Queenstown's community support centre, tried to stop the auction with last-minute appeals to the local MP, Todd Barclay, and Social Housing Minister, Paula Bennett.