Thirteen homes for Wellington's most needy are going on the private market, and more are expected to follow as the city council faces "commercial realities".

Wellington City Council has already spent the $220 million it received from the government 10 years ago in a partnership deal to redevelop its social housing stock.

Under the deal, the council is legally bound to retain its social housing levels for the next 20 years, and it is understood to have drawn up a list of other homes it plans to sell, in order bring in funds.

The funding shortage comes as social development portfolio leader Brian Dawson described social housing demand in the city as "astronomical", with 350 people on the waiting list.

The council houses about 3400 tenants in its portfolio of 2090 properties, making it the second biggest landlord in the country.

It has not identified the 13 homes that will be put up for sale as it takes a strategic look at the performance of its housing portfolio.

City housing manager Michelle Riwai confirmed there would be further changes in the next 10 years.

"On a case-by-case basis we will assess opportunities for development and or disposal.

"If a property is identified as not meeting the required criteria, it may be considered for sale. All funds are reinvested back into the improvement, redevelopment, or construction of new social houses in Wellington."

The shakeup of housing assets is part of the council's Strategic Housing Investment Plan (Ship). It is understood that will include the redevelopment of sites such as those on Nairn and Harrison streets, which have been vacant since the Kaikōura earthquakes in November 2016.

The council agreed a $400m partnership with the Crown in 2007, which involved the government putting in $220m, and the council investing the rest from its rental income.

But rising costs have meant the council has drawn all the funding in the first 10 years of the partnership – raising questions about how it will meet its commitment to retain its current social housing stock.

It has also agreed to continue, and fund, the upgrade for a further 10 years beyond the programme, until 2037.

Ratepayer money cannot be used for city housing, so the upgrade programme relies solely on rental income, unless the council can secure more government money.

City council housing development manager John McDonald said it was still committed to delivering the programme from rental incomes.

"There has been an increase in insurance, construction and GST costs. All these things add to the pressure of delivering the programme."

Funds from the disposal of properties could be put towards the programme, but the council had not made any decisions on how the income would be spent, he said.