Northland's house prices still rising, as first-home buyers struggle

Sam Mather and Trevor Attwood, who joined forces to buy a house in Whangārei. Photo / Michael Cunningham

Northland has the hottest housing market in the country, and first-home buyers are still struggling to find affordable properties.

The data, from the latest OneRoof-Valocity report, shows prices rose 5.8 per cent in the last quarter and the average property value in the region is now $923,000.

However, there are signs the market is slowing down, with prices rising by less than the previous quarter's 7.9 per cent.

Mortgage broker Sam Mather recently bought his first house in Whangārei after a long search.

After 18 months of looking for a house he could afford by himself, he teamed up with a friend to purchase a three-bedroom, 135 sq m house in Kamo.

"It's just so difficult for people on their own to secure a loan at the moment," Mather said.

"When I started looking, I would have been able to buy by myself, but during the whole of last year prices just skyrocketed."

He said he and his friend Trevor Attwood were lucky to get their house, and they got in "just as the market was cooling off".

They paid $660,000 for their property, below the average price in Kamo which is now $849,000.

Mather said he and his colleagues at Zest Brokers have found a lot of people are asking about getting home loans on their own, but few are securing them.

They are now advising clients to team up with someone to buy if possible, as the cost of servicing a loan has risen along with prices.

A lot of clients have asked about the Kiwisaver First Home Grant, Mather said, but virtually none are eligible due to a $400,000 cap on the price of existing homes.

"It's just not really a feasible option in the city anymore, unless you're buying in Kaikohe, Kaitaia maybe, some of the smaller towns in Northland."

"The Kiwisaver Home Start Grant is, in my opinion, an absolute gimmick at the moment, it doesn't serve anybody."

Kāinga Ora's First Home Loan scheme, where buyers can get financing with a five per cent deposit, has the same regional price cap of $400,000, or $500,000 on new homes.

Karteek Rayakota, who also recently bought his first home with his wife Bhargavi, said they had to lower their expectations because of prices and mortgage difficulties.

Rayakota and his wife found themselves unable to get a mortgage with a 10 per cent deposit after lending rules were tightened, and therefore could not afford the new home they wanted.

"Initially we were looking at new-build houses, like at Totara Park, but they were all round about $800,000 or $850,000."

They ended up buying an existing three-bedroom house in Raumanga for $695,000 after putting together a 20 per cent deposit.

"We are so lucky with this property, it was built in the 1970s but it's been very well looked after," Rayakota said.

Karteek and Bhargavi Rayakota bought a three-bedroom house in Raumanga. Photo / Supplied

They also lost out on one house after paying thousands for building reports and application fees solely because they could not get a mortgage sorted in time.

Despite the high prices they encountered in Whangārei, Rayakota said it was still more affordable than some parts of the country.

"Initially we also had plans to move back to Wellington but looking at the housing prices, with a 20 per cent deposit, we realised there was no way we could go back there and afford any house."

Paul Beazley from Harcourts Whangārei said it seemed as though house prices had stopped rising, particularly in the lower price brackets.

"I think the feeling is that we've probably plateaued and it's hard to predict if we're going to drop at all, he said.

"That median sale price probably reflects that there's been more sales in the upper price brackets."

A lack of first-home buyers was a major factor in the slowdown at the lower end of the market, he added.

The average property price in Langs Beach is now $2,429,000. Photo / Michael Cunningham

Growth was particularly high in a number of expensive beachside suburbs, the OneRoof-Valocity report noted, such as Langs Beach, Tutukaka and Mangawhai.

The average property price in Langs Beach is now $2,429,000.

The market, particularly at the lower end, had seen the effect of a lack of first-home buyers, due to the changes in mortgage lending rules, Beazley said.

Wayne Shum, head of research at Valocity, said the rise in interest rates and the new CCCFA (Credit Contracts and Consumer Finance Act) rules had an effect on the number of first-home buyers.

"For many, getting a mortgage has proved too hard, and delayed or torpedoed purchase plans.

"The U-turn on some of the CCCFA's more stringent measures will come into effect in June, so there may be a brake on further falls."

Growth in other parts of the country slowed considerably, with national growth in house prices just 0.5 per cent. Prices in Auckland dropped by two per cent.

Prices in Whangārei and Kaipara rose by 6.9 per cent and 7.6 per cent respectively.

Growth in the Far North was considerably less at 2.8 per cent.

The only town or suburb in Northland where prices fell was Kaitaia, which had a drop of 0.7 per cent, to $429,000.

The average house price in Whangārei, the report reveals, is now $986,000. Just two years ago, the average price was $655,000.