Plans for an additional $10,000 grant to help first-home buyers with their deposit will push house prices up and further out of reach of Northlanders, a leading economist says.

The National Party is promising to increase government HomeStart Grants from $10,000 to $20,000 from January next year. The grant will be $30,000 if a new home buyer is building a home.

National says the additional grant means a further 80,000 people will be able to buy a first home over the next four years, on top of the 31,000 people the scheme has already helped.

In Northland, a HomeStart Grant can be used for up to a $400,000 home, or $450,000 for building.

National predicts its policy would enable 200,000 houses to be built over the next six years.

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But economist Bernard Hickey said the extra buyers created would simply lead to increased prices.

The Government was better off building more one- and two-bedroom houses and selling them for between $300,000 and $400,000 to help struggling families.

"Unless there are extra houses on the market, all the increased support will do is push [up] the price of existing homes. We don't have flexibility of supply of houses, particularly in a region like Northland.

"Just before the last election, National increased HomeStart Grants from $5000 to the current $10,000 and the effect of that was house prices in Auckland alone went up by $250,000," Mr Hickey said.

"In the end, it'll be a bit like a dog chasing its tail as far as first-home buyers are concerned because they'll never quite get there as house prices will keep rising.

"Collectively, the Government, local councils and people need to deliberately build hundreds of one- and two-bedroom apartments and townhouse-style affordable properties to be sold for three hundred to four hundred thousand dollars."

Real estate agent Paul Beazley of L J Hooker in Whangarei said he was not sure whether more financial assistance to first-home buyers would push house prices up.

"If it creates opportunities for more first-home buyers in a provincial town like Whangarei where property prices haven't really got out of hand, then it's a good thing," he said.

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