Residents said if the house was not filled the Government would say there is no demand and sell it below Government Valuation (GV).
"Which will bring down all the values to the other houses in our areas," said Mr Moat, who with his wife Elizabeth is trying to sell.
"But to try and sell your place now is just impossible."
Tukituki Labour spokesperson Anna Lorck said money was spent on the state house to fix it up after the previous tenants left, and now it is sitting empty, in ruins.
"If the Government can't do its job and fill this house with a family in need, then we will find one," said the residents.
"Today shows a real sense of community on this street," Ms Lorck said.
The previous tennant was told to leave after his partner died because it was "too big" for him.
Ms Lorck said the house represents hundreds of empty state houses in Hawke's Bay.
"It is a real issue, the neighbours are fed up and they are taking action."
She said the Government claimed no one wanted to live in the house.
"There are hundreds of people who have applied for this house and many here today who would love to live in it," Ms Lorck said.
One mother who attended the neighbourhood gathering had been living in a caravan with her three young children.
She said she was desperate to find a home.
Another father was growing increasingly concerned about his daughter's health as conditions in their home were making her sick.
"I need to find a new house to live in before she gets worse," he said.
Ms Lorck said state house applicants must fit a strict criteria to be granted a lease.
"How long will it take to make this house a home?
"The Government has spent thousands of dollars renovating the house, and yet it remains empty."
Tukituki MP Craig Foss said he was unaware of the specific details of the Campbell St property, but said the house would be empty for a valid reason.
"There are a number of reasons why a state owned property would be empty, it often depends on the individual's circumstances," he said.
He said rentals can be turned down by those on the waiting list because of the location, wrong size or expenses.
The MP believed there were "lots" of rentals available in the Bay. "Social welfare and Housing NZ are designed to help people when they need it.
"Some fall through the cracks but it is my hope those people engage with these agencies to get assistance."