Tough loan-to-value ratio restrictions are affecting house sales in Northland but not in Whangarei where average house prices increased by nearly $11,000 in just a month.

The monthly Quarterly Value House Price Index for October released by QVNZ shows the average value of a house in Whangarei was $451,874 compared with $441,244 in September.

The average Whangarei house price rise in the year to October this year was 23.9 per cent while the increase in the past three months was 7.1 per cent.

Nationwide residential property values for October increased 12.7 per cent over the past year - the slowest rate since May.


In Kaipara, a modest rise of 0.8 per cent pushed the average house value in October to $436,144 from $432,772 in September. But the yearly rise for the Kaipara was 20.2 per cent.

The Far North housing market performed poorly last month with average house values falling 2.8 per cent to $359,876 from $370,088 in September. However, over the past 12 months the average price in the Far North is up 11.6 per cent.

From October this year, banks require a 40 per cent deposit from investors purchasing existing housing stock and most lending to owner-occupiers would also require a 20 per cent minimum deposit.

Nick Goodall, senior research analyst at CoreLogic, said the LVR restrictions were having a bigger impact in the Far North and Kaipara than in Whangarei, partly because Auckland investors were still buying properties in the main commercial centre of Northland.

Kaipara, he said, usually performed well and at times better than Whangarei because of its close proximity to Auckland but its quarterly growth this year had slowed.

"The impact of LVR restrictions in Northland, particularly in Whangarei, is slow moving. There's still a lack of listings in the market not just in Northland but the rest of the country as well which means house prices will remain up there."

Mr Goodall said it was hard to predict how much longer LVR restrictions would linger but at least six months would be a good estimate.

The rise in prices has been attributed to more Aucklanders snapping up residential, commercial and industrial properties, coupled with an increase in migration to Northland.

QVNZ said those investors shut out of more expensive markets appeared to be turning their sights to more affordable markets relatively close to Auckland such as Whangarei.

Last month Reserve Bank Governor Graeme Wheeler told the Northern Advocate there were no plans to introduce a regional variation to the LVR rules.

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, Mr Wheeler said.

"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," he said.