There's an excellent article on the housing group report in this morning's Dom-Post by Prof. Phillippa Howden-Chapman, director of Otago Uni's housing and health research programme. She points out that we have only 6% of hosueholds in social housing here, compared with 18% in England. She also notes the conflict of interest when businessmen, developers and small religious housing charities predominated on the housing group. It also ignored the Otago research, which shows that moving into a state house lowers the rate of avoidable housing-related hospital admissions.
The fact is that if you're on a low wage or a benefit - or get repeatedly shunted between the two - you can't afford to buy or maintain a house (or at least not in a place that also has jobs), and you can't afford decent housing at market rents either (even with the landlord's subsidy, otherwise known as the accommodation supplement).
(The middle class rush to buy up cheap housing as an investment for their old age is partly to blame for pushing up prices and rents, but hey, what else were they supposed to put their savings into - finance companies?)
So what are you supposed to do? The "state house for life" argument is just a red herring - transience is a much bigger problem, as people try to solve the enough jobs/enough beds/affordable rent conundrum. If affordable smaller homes could be provided in every neighbourhood, there'd be no problem getting older people to downsize and free up their state house for a new family.