Councillors are expected to this week endorse a first of its kind Memorandum of Understanding between the two levels of government which would result in the council re-investing the rates the state government pays on its social housing properties, about $2 million per year.

The state would match the investment, in addition to its existing social housing redevelopment program. The MoU would allow the two parties to "expedite the delivery of new, more suitable social and affordable housing" while "supporting urban renewal" by "renewing older social housing", Tuesday's council meeting report says.

The NSW Land and Housing Corporation owns 4317 dwellings in the Newcastle LGA, about 150 fewer than a decade ago. Houses have an average age of 56 years and apartments 44 years.

Applicants for social housing can face a 10-year wait to find a home. There are 1179 households on the waitlist, the meeting report says, with 98 identified as having an "urgent need". But there are only 59 social housing properties currently under construction or in planning.

Beyond that, Newcastle house prices rose 25 per cent in the year to June while rents increased 9.9 per cent.

Hunter Labor MPs have repeatedly denounced the state government, in particular, for a lack investment in new social housing and lord mayor Nuatali Nelmes said housing affordability was now "at or very near to crisis point" with 10,000 families "suffering from housing stress across the city".

"Housing affordability and the shortage of social housing is so serious that we as a council can't just describe it as a NSW government responsibility," she said.

"This partnership allows City of Newcastle to do what our staff have long wanted to do, and that is roll up our sleeves and provide local knowledge ... so that new housing is delivered in the right places and in the right numbers."

The MoU would allow the council to have direct input into new social housing developments. A map of government-owned homes in the LGA shows very few are close to the train stations on either of the city's two passenger lines, nor key "catalyst areas" like Broadmeadow and Callaghan.

Housing Minister Melinda Pavey said she was excited to "deliver on our shared desire for more and better social and affordable housing". She said the commitment was "the next chapter in an already strong collaborative relationship" between the state and council.

"Over the past two years, we have delivered 44 new social homes across the City of Newcastle. I am pleased to advise that over the next two years, we are set to deliver 59 further new social homes, located in Shortland, Waratah West, Wallsend and Lambton," she said.

"I am excited about the opportunity to work in partnership with council and deliver on our shared desire for more and better social and affordable housing in the City of Newcastle."

This MOU will also assist in the implementation of the Newcastle Local Housing Strategy and Local Strategic Planning Statement, which aim to facilitate 19,500 new homes over the next 20 years.

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