Northland homeowners stand to have thousands of dollars of equity wiped from the value of their properties as Reserve Bank-imposed restrictions on mortgage lending kick in, Labour's Housing Spokesman Phil Twyford says.
Mr Twyford said the Reserve Bank's loans-to-value ratio (LVR), which came into force on October 1 - andlimits banks to giving out only 10 per cent of mortgages to people with less than a 20 per cent deposit - may work in Auckland but the effects of the "one size fits all" policy on regions such as Northland were being ignored.
The Reserve Bank introduced the policy to try to dampen down the rampant rise in property prices, but Mr Twyford said while Auckland and Canterbury were driving that rise, the regions were being hit by the policy. "The rising property market is not in Northland, yet Northland and the other regions are going to bear the brunt of this policy. The Reserve Bank said LVR restrictions are likely to reduce house price growth by 1-4 percentage points in the next year, relative to the baseline of no LVR restrictions," he said.
"That will drive down property prices in Northland by thousands of dollars, leaving property owners with a much less valuable asset."
Mr Twyford said according to QVNZ, at the end of September the average house value in the Far North was $296,409 - a drop of 5.9 per cent on the previous September; $328,097 in Whangarei (2.1 per cent rise) and $317,135 in the Kaipara (1.8 per cent rise).
He said those figures showed that price rises were not an issue in Northland, but if the LVR policy led to the drop in values the Reserve Bank wanted, thousands would be wiped from home values in the region.
"Homeowners in the North could take a hit to their equity because of the Government's mismanagement of the Auckland housing crisis. Based on the Reserve Bank numbers they risk seeing thousands of dollars in some cases wiped off their house values," Mr Twyford said.
"The Government didn't think through the impact of the LVR lending limits - either for first home buyers, or for parts of New Zealand where house prices are static or already declining. Homeowners in the North risk ending up as the collateral damage of a policy designed to dampen demand in the Auckland housing market."
He said there was also a risk of a depressing effect on the local economy.
"It is another kick in the guts for the regions. And then to rub salt in the wounds, Housing Minister Nick Smith wants to sell off broken down old state houses at a discount, in areas where there is no housing crisis."
