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 - and limits 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).