Bay house prices increase slightly

The price of an older three-bedroom Hawke's Bay house varies greatly depending on the area, new figures show.

The latest QV New Zealand Herald Property Report shows the average house sale price in Napier rose 2.9 per cent in the three months to April to $325,051, while Hastings rose 0.1 per cent to $300,924.

The cheapest area to buy a house across the region for the quarter ending March was Maraenui with a median house price of $148,000, while the most expensive area was Havelock North at $457,000.

Harcourts Hawke's Bay managing director Kaine Wilson said the median price for Havelock North could buy either a modern brick or plaster three-bedroom home on a smaller section, or a 1950s three-bedroom stucco or weatherboard home in a more established area towards Te Mata Peak which "could lend itself to work".

"The older established areas of Havelock do hold their values significantly." In contrast, the quality of ex-state, three-bedroom weatherboard houses in Maraenui was "totally different", and properties did not have the "superior finish" of Havelock properties.

"It's all in the improvements."

According to the report, the country's most expensive suburbs were mostly in Auckland, with average prices ranging between $600,000-$1.5 million for a property on the city-centre fringe.

Affordable housing is shaping up to be a key election issue as political parties compete to offer the best way to increase housing stock.

The Government is freeing up land for development under its Auckland Housing Accord and also lifted some tariffs on building materials in this year's Budget.

Labour has vowed to build 10,000 new homes a year for a decade under its KiwiBuild plan and proposes compulsory KiwiSaver and tighter immigration policies.

Last month Labour leader David Cunliffe accused Prime Minister John Key of being "in denial" about a housing crisis after the OECD's latest Economic Outlook report said New Zealand house prices were among the most overvalued in the developed world.

Meanwhile, thousands of young couples and families are struggling to get into their first home amid rising interest rates and lending restrictions on low-deposit mortgages.

Political commentator and Otago University lecturer Dr Bryce Edwards said the home affordability debate favoured opposition parties over a Government perceived by some to be doing nothing about the problem. In contrast to soaring Auckland values, most regional values remain well down on their worth from the 2007-08 market peak - sparking claims provincial New Zealand has been unfairly targeted by the Reserve Bank's lending restrictions.