Wellington, Dec 2 NZPA - Repairing rundown state houses which are causing health and social problems is a higher priority than building new ones, Prime Minister John Key says.

Mr Key, who grew up in a state house, said yesterday he had "real concerns" about the quality of some of them and warned the Government was in danger of becoming a slum landlord.

"Our primary focus will be to improve the quality of those houses, so it's unlikely we will look to aggressively build stock," he said.

"I think there are real gains to be made if we can make improvements in that area. It will always be a trade-off against whether we increase the size of the state housing stock."

Mr Key said some state houses were poor quality homes without insulation or heating and the Government was worried about the resulting health and social problems.

He said upgrading state houses also had the spinoff of using spare capacity in the building industry.

"If we built new houses they would be smaller in number, if we do renovations they would be across the country," he said.

"The capacity in the construction industry is there for the first time in a long time."

Mr Key was reacting to a survey released by the Business Council for Sustainable Development which questioned 3526 people.

It found that 26 percent of those surveyed said their homes had made one member of the family sick and only 29 percent said their homes were very warm or comfortable.

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