On Monday night, Mr Luxon and Sport Minister Chris Bishop hosted the Australian and New Zealand cricket teams at the property in the Wellington suburb of Thorndon.
The festivities - including a Maori welcome and a backyard cricket game on a specially-mowed pitch - were held outside on a beautiful summer's evening.
NZ PM Chris Luxon and Sport Minister Chris Bishop (centre) with cricketers from NZ and Australia. (Ben McKay/AAP PHOTOS)
Mr Luxon, who described himself as a Test cricket tragic, conversed with players for an hour, telling Usman Khawaja he was unable to live there.
"The prime minister said he couldn't live in his place," Mr Khawaja said.
"He said it was condemned, the kitchen was condemned ... I said, 'why don't you live here?' He said, 'I'm actually not allowed, it was condemned'."
"I said 'what?!' You're the prime minister, fix it!'
"He was like 'oh, that costs money'. I'm like, 'surely there's some money in the New Zealand system!"
A spokesman for Mr Luxon said the prime minister disputed Mr Khawaja's account, saying he never used the word 'condemned'.
"He told them he was living in his flat as Premier House has well-known maintenance issues," the spokesman said.
The prime minister has been coy on his living arrangements since taking office in November last year.
Wellington newspaper The Post reported earlier this month Mr Luxon was living at his Wellington apartment, one of seven New Zealand properties the wealthy former executive owns without a mortgage.
The National leader, who lives in Auckland, faced criticism for accepting a $NZ31,000 ($A29,000) annual allowance while staying in his own Wellington flat as an MP.
As prime minister, he is now eligible for a $NZ52,000 ($A49,000) handout if he does not live at Premier House.
The Post's report says Mr Luxon has received a briefing on work needed at Premier House, and he was mulling it over.
"Premier House requires a significant amount of work so the prime minister will consider that before making any decisions around residing there," a Premier House Board spokesperson said.
The decision to renovate Premier House would run counter to the coalition government's pledges to rein in public spending.
Mr Luxon's government is engaged in a tough round of budget cuts, aiming to shrink the public service by $NZ1 billion ($A940 million) annually, including spend on consultants.
However, it is a widely-held view that Premier House needs something of a spruce, with former finance minister Grant Robertson saying in 2020 it "has a slight 80s motel vibe to it".
"On the night of the Netball World Cup final, I had a sleepover at Premier House and I can tell you that it is in severe need of an upgrade upstairs there ... it's not up to scratch," he said.
Then-prime minister Jacinda Ardern opted against the renovations as she was "not someone who likes to spend money on herself", according to Mr Robertson.
On Monday night, Mr Luxon enjoyed time in conversation with Test captains Pat Cummins, Tim Southee and others.
In a short speech, he told players he was "probably the biggest Test cricket fan" of any New Zealand prime minister, saying he played corridor cricket with Mr Bishop in Parliament House while in opposition.
"We were sort of imagining ourselves playing with you," he told the Test squads.
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