Average house price increase in Northland leapfrog national hike

By imran ali

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Whangarei nurse Sijoy Alex and wife Solgy Antony with children Isabel and Ivaana have been looking to buy a house for the past three years without joy.
PHOTO/JOHN STONE
Whangarei nurse Sijoy Alex and wife Solgy Antony with children Isabel and Ivaana have been looking to buy a house for the past three years without joy. PHOTO/JOHN STONE

Property prices in Northland continue to soar, with the cost of buying a house in Whangarei up almost 22 per cent in the past year, but there's a warning that the market may slow down.

The increase in property values throughout Northland over the last year have leapfrogged the percentage hike nationally.

The latest monthly Quarterly Value House Price Index released by QVNZ shows the average residential property values in Whangarei for September rose 21.9 per cent, or an increase of $79,223, on a year ago while the change in the past three months was 7.1 per cent.

The average current value of a house in Whangarei is $441,244 compared with $362,021 in September last year.

Kaipara came second at 20.9 per cent with the average price of $432,772 - up from $357,835 a year ago.

The average annual increase in the Far North was 16 per cent or $370,088 from $319,072.

An increasing number of Aucklanders snapping up residential, commercial and industrial properties, coupled with an increase in migration to Northland, have been blamed for a rise in prices.

According to QV, Whangarei was one of the stand out regional performers.

Nick Goodall, senior research analyst at CoreLogic, said the performance of the housing market in Northland was consistent with centres in the top half of the North Island.

He said Northland's close proximity to Auckland, investors moving in, and migration to some extent was driving prices up.

"In general, we've seen strong growth throughout the country and Northland included with low interest rates and houses in short supply but that growth will slow down given the Loan to Value Ratio (LVR) restrictions the Reserve Bank was putting in place shortly."

Those restrictions, Mr Goodall said, included a rise in investor deposit from 30 per cent to 40 per cent and for first-home buyers to put in a 20 per cent deposit for a loan.

Such measures will make it harder for Whangarei nurse Sijoy Alex's family who have been hunting for a house for the last three years.

He, wife Solgy Antony and their two daughters moved to Whangarei from the southern Indian state of Kerala six years ago and have just moved into a rental property on Maunu Rd after earlier renting on Mair St.

Although both work as nurses, Mr Alex said finding an affordable home seemed to be out of reach, not just for his family but for countless others.

"We looked at a number of options including buying land and building on it but building a house in the right location is almost impossible so we've dropped that plan and are thinking of buying an existing house," he said.

He said it was hard to even get an affordable rental property in Whangarei and believed rules around buying multiple houses, particularly by investors, needed to be tightened.

"I think if the government wants migrant communities to invest in provincial centres like Whangarei, then house purchase has got to be affordable and made easy, particularly for first home buyers."

Reserve Bank governor Graeme Wheeler said there were no plans to introduce a regional variation to the LVR rules.

Mr Wheeler said Northland's housing market had been lagging behind Auckland, and the rest of New Zealand, for some time and the market in the region was now catching up.

"Northland has had some pretty tough times economically, but things are picking up again with some positive figures, with retail sales, investor confidence and employment growing. Now the economy is picking up substantially and we are seeing a spill from Auckland property investors," he said.

- Northern Advocate

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