Northland first home buyers need $133,000 deposit as property prices soar

Martin Kaipo is concerned families from low-income areas like Otangarei are having to move out as new landlords put rents up. Photo / Michael Cunningham

First-home buyers in Northland need more than $130,000 as a deposit— almost three times the average income in the region— as the soaring median house price hits $667,000.

Northland's housing market rose a staggering 25 per cent or $132,000 since the Covid lockdown ended and almost double what it was five years ago, latest figures from OneRoof show. The average annual income in Northland is $44,200.

Ōtangarei recorded the highest percentage increase in median house prices (44 per cent) but a community leader is worried a rise in investors buying in the suburb is driving rents up and forcing existing tenants out.

Martin Kaipo, from Te Hau Awhiowhio o Ōtangarei Trust, said as more and more low-income families moved out of Ōtangarei, this contributed to the homeless situation as they couldn't continue paying the average $250 to $350 per week rent in the suburb. Property investors were buying the suburb's relatively cheap homes and upping the rents.

OneRoof editor Owen Vaughan said first-home buyers entering the Northland housing market now would typically require a $133,400 deposit, up $26,400 on the same period last year.

"For many homeowners, this is a significant boost to their real estate fortunes. For those not on the property ladder, the goal of owning a house, even in a low-interest-rate environment, may seem further off than ever."

New Zealand's median property value jumped 25 per cent in the last 12 months to $779,000, adding $154,000 to the cost of buying a home.

''For Northland, the share of purchases by investors and movers remains the same as last quarter, with investors sitting at 28 per cent and movers at 13 per cent. However, investor activity is up on a year ago, when their share of new mortgage registrations was 25 per cent,'' Vaughan said.

''The share of new mortgage registrations to first home buyers in the region has declined from 40 per cent a year ago to 36 per cent this quarter."

Manawatū-Whanganui is the country's hottest property market, with median values rising 41 per cent or $158,000 to $548,000.

A potent combination of record-low interest rates and the removal of home loan restrictions, as well as travel restrictions curbing New Zealanders' spending, resulted in a rush of buyers entering the market and house prices growing at their fastest pace in years.

This in turn led to a series of Government and Reserve Bank measures aimed at slowing house price growth.

"Historically, low-decile areas like Ōtangarei have been less appetising to the market purely because of the environment, but Covid has changed all that and investors are now moving in," Kaipo said.

Otangarei registered the biggest percentage increase in median house prices in Northland since the Covid lockdown ended. Photo / Tania Whyte

Kaipo is chief executive of Te Hau Awhiowhio o Ōtangarei Trust, which has taken in whānau who had been sleeping rough in its six two-bedroom units.

"The average property price in Ōtangarei five years ago was $200,000 to $250,000 but it's gone up now. The only frightening part is the existing whānau having to move out, and that will only add to homelessness and those living in sub-standard conditions.

"We've had between 86 per cent and 90 per cent Māori living here at one stage but we are slowly getting a mix of people but at what cost? I know a couple of cases where rents have gone up to $450."

At a territorial level, Whangārei's median value jumped 31 per cent ($169,000) since May last year to $719,000, Kaipara's rose 12 per cent to $672,000, while property values in the Far North performed slightly better, with growth of 31 per cent to $568,000.

The extra deposit required for Whangārei first-home buyers is $33,800, in the Far North it is $21,600 and in Kaipara it is $14,400.

In Northland, the share of purchases by investors was 28 per cent and buyers new to the region 13 per cent in the three months to mid-May, the same as the previous quarter.

However, investor activity was up on a year ago, when their share of new mortgage registrations was 25 per cent. The share of new mortgage registrations to first home buyers in the region declined from 40 per cent a year ago to 36 per cent in the May quarter.

The median house price topped $1 million in Maungatapere for the first time, while Tutukaka and Kauri are just $15,000 shy of the $1m mark.

Langs Beach has the highest median house price in Northland at $1.7m.

Vaughan said the post-lockdown increases were now baked in, and it would take a Global Financial Crisis-type event to bring prices back down to pre-Covid levels.

OneRoof editor Owen Vaughan said first home buyers' dream of owning may seem further off than ever. Photo / NZME

In the three months since the last OneRoof Property Report, he said a raft of new measures designed to slow the market have been implemented.

The Reserve Bank reintroduced the loan to value ratio restrictions and the Government announced new policies aimed at dampening speculative demand and tilting the balance towards first-home buyers, he said.

Rising suburbs:

Ōtangarei, from $245,000 to $345,000, 12-month rise $100,000 or 41 per cent

Ruatangata, West from $655,000 to $$915,000, 12-month rise $260,000 or 40 per cent

Kauri, from $725,000 to $985,000, 12-month rise $260,000 or 36 per cent

Avenues, from $415,000 to $560,000, 12-month rise $145,000 or 35 per cent

Kensington, from $455,000 to $610,000, 12-month rise $155,000 or 34 per cent

Raumanga, from $365,000 to $485,000, 12-month rise $120,000 or 33 per cent

Woodhill, from $445,000 to $590,000, 12-month rise $145,000 or 33 per cent

Horahora, from $485,000 to $640,000, 12-month rise $155,000 or 32 per cent

Onerahi, from $475,000 to $625,000, 12-month rise $150,000 or 32 per cent

Tikipunga, from $435,000 to $570,000, 12-month rise $135,000 or 31 per cent