Northland first home buyers squeezed out by rising prices, plummeting listings

The number of homes on the market around Northland has dropped more than 50 per cent since July last year and almost 90 per cent since 2010. Photo / Michael Cunningham

A new survey shows first-home hunters in regions such as Northland increasingly pessimistic about being able to buy a place of their own.

That's backed up by figures which show Northland house prices are continuing to rise while the number of homes listed for sale has plunged by more than 50 per cent in the past year.

The nationwide survey, of 500 members of the First Home Buyers Club on behalf of OneRoof, shows 61 per cent are not confident of finding a home within three months.

At the same time last year 51 per cent weren't confident of finding a home within three months — and that was when the country had not long emerged from a Covid-19 lockdown.

The current figure for anywhere outside Auckland is even higher, 72 per cent.

The latest realestate.co.nz shows 470 homes were on the market in Northland last month, a drop of 54 per cent from July 2020.

It's a stark contrast to the situation 10 years ago. In December 2010, in the aftermath of the financial crisis, 4600 properties were on the market in Northland — almost 10 times more than today.

Increased loan-to-value ratios set by the Reserve Bank, which mean buyers have to stump up bigger deposits, and the prospect of higher interest rates may push some investors out of the market, but that also increases the barriers for first-home buyers.

First Home Buyers Club director Lesley Harris said houses in the regions had become "way more" expensive but salaries hadn't gone up.

Rising rents also made it harder for would-be home owners to save for a deposit.

Buyer confidence would keep dwindling unless the market plummeted, which wasn't going to happen, or the Reserve Bank significantly changed its policies.

"People have fears that more and more people from the bigger, more expensive suburbs are going to go into their areas and buy up their properties because they're more affordable, which will just continue to price them more ferociously out of the market," she said.

Last month's average asking price Northland-wide was just under $800,000, a 4 per cent increase on the previous month. The increase over the past year is just under 33 per cent.

Harris said the solutions put forward so far by the Government were inadequate.

"They are not aimed at the poorest people in our community. They're just random things which don't really help anyone."

Surging Northland prices are thought to be driven by Aucklanders moving north and former Northlanders coming home from Australia.

At the same time people who do own a property are sitting tight because of the difficulty of buying another place if they sell.

Kerikeri mortgage broker Sarah Curtis, however, urged first-home hunters not to give up.

The couple who had moved into their own home in Kaikohe had made several previous offers on properties. Photo / Tania Whyte

In the past week she had helped two families into their own homes in Kaikohe and Haruru — but buying a house these days required a long-term approach, she said.

"The days when you could just go and look at an open home at the weekend and decide maybe now you want to buy a house are gone. You need to put in two or three months' work beforehand."

These days banks wanted proof of changed spending habits, ability to save and paid-off debt, rather than just accepting customers' assurances they would change their ways once they had a mortgage.

Curtis said she had been working with some of her clients for three years.

The couple who had moved into their own home in Kaikohe this week had made several previous offers on properties. Every offer had collapsed but each time they'd pick themselves up and start again.

"So never, ever give up. Besides, something is going to have to change. It cannot continue like this. If you have yourself in the best possible position when that change happens, you'll be ready."

Things people could do to improve their chances included getting a pre-approved loan — even if it wasn't at the level they wanted, it was a good first step — and to make sure they were contributing to KiwiSaver. It was also important to be in the right scheme and with a provider that didn't charge excessive fees.

Curtis also urged the Government to remove the price cap from its First Home Buyer Grant. It was currently capped at $400,000 in Northland but even in Kaikohe it was almost impossible to buy a home for that price.

She had organised a price-cap petition which had gathered just under 900 signatures and was about to present it to Parliament.

Curtis said many of her clients who were successful had help from their families.

"For people who can't rely on that it's a whole lot tougher," she said.

James Wilson, a director at OneRoof data partner Valocity, said Government policy aiming to tilt the balance back towards first-home buyers hadn't worked.

The loss in confidence highlighted by the survey was understandable but he urged first-home buyers not to give up.

"If they think they can't ever afford the deposit then they write it off as an option rather than keeping the savings going and they go and buy a new car. I think there's a danger of letting it become too self-fulfilling or defeatist."

Wilson said he felt for people living outside Auckland.

"When you're a first-home buyer in Auckland, people say it all the time, 'why don't you look outside of Auckland?' But when you're already in the smaller regional centre, where do you go next?"