Northland first-home buyers could soon be back in the market, as the Reserve Bank announces low-deposit lending restrictions may be scrapped by the end of the year.

The controversial measures have forced most home buyers to raise 20 per cent deposits, putting the property ladder out of many people's reach, amid claims provincial New Zealand was being unfairly targeted.

But Reserve Bank deputy governor Grant Spencer has said pressures in the housing market are easing gradually and the lending restrictions are achieving their purpose.

"The volume of house sales has dropped considerably across the country, other than in Canterbury, and the slowdown in volume has also been reflected in prices."


The earliest date for rolling back restrictions was likely to be late in the year.

Northland financial adviser Joe den Enting said getting rid of the restrictions altogether would be "fantastic" for the region.

The impact of the restrictions on first-home buyers had been "huge".

"[First-home buyers] are gone. Since the introduction of the [loan-to-value-ratio] ban on October 1, it's basically scared off the first-home buyer. They've put it in the too-hard basket."

Homes between $200,000-$300,000, which had previously been affordable, were now out of reach for many Northland house hunters. And while there were other lending options available, extensive coverage of the change deterred many from even trying to get a loan, Mr den Enting said.

"Open homes stay empty, while [more] properties are moving in the higher bracket."

According to the latest QV figures, the average house value in Whangarei reached $338,647 last month - up 3.5 per cent from a year ago. The average house in Kaipara was worth $330,431 - up 4.7 per cent - while the average Far North house value slipped 1.8 per cent to $304,538.

The Reserve Bank introduced loan to value restrictions in October last year, limiting banks' lending to borrowers with less than a 20 per cent deposit to 10 per cent of new lending. Mr Spencer said without those restrictions annual house price inflation might be 2.5 per cent higher.

Labour's housing spokesman, Phil Twyford, called on the Government to "fine-tune" the restrictions by applying them only to Auckland and Canterbury: "Why should regional New Zealand continue to be punished for the Government's failure to fix the Auckland housing crisis and get the Canterbury rebuild happening?"

ASB economist Christina Leung said the Reserve Bank would not remove the restrictions unless it was confident the housing market was slowing on a sustained basis and that interest rates would sufficiently contain house prices.

Westpac chief economist Dominick Stephens said it was possible the restrictions' timetable could change if the housing market took off again.

"But in our view that is unlikely to happen."

The Northern Advocate will be investigating home affordability in our region and ways for entry-level buyers to take their first steps on the property ladder. Watch out for our coverage in the weeks ahead.