Affordabaility is an issue for investors and first home buyers but not for those who paid $6.2 million for this house on Opito Bay Rd in Kerikeri. Photo / NZME
Affordabaility is an issue for investors and first home buyers but not for those who paid $6.2 million for this house on Opito Bay Rd in Kerikeri. Photo / NZME
Investors retreating from the Northland housing market will ordinarily open the door for first home buyers to get in but eligibility criteria and affordability are still keeping them out.
The situation is particularly bad in Whangārei, where it's virtually impossible to buy a decent first home for under $400,000 despite Government's First Home Grant and KiwiSaver thrown in with a loan deposit.
First home buyers in Northland increased their share of new mortgage registrations by 4.2 per cent to 26.2 per cent last month, figures from the OneRoof property report show.
Whangārei mother Sharlane Ujdur was caught out by the eligibility rules and couldn't obtain a loan but persevered for so long she managed to find a three-bedroom home in Hikurangi for $400,000.
"It was really hard to get something under $400,000 but I never gave up and at times I got sick emotionally because things kept crashing, but I picked myself up and kept looking.
"You jump hoops to get there. We climbed mountains. For first home buyers like me, it doesn't have to be the flashest or your dream home. The main thing is to have a home."
It took Sharlane Ujdur more than an year to find a house for up to $400,000 that qualified for a first home grant and KiwiSaver deposit. Photo / John Stone
OneRoof figures show the median house price in Kaipara went up 1.7 per cent to sit at $600,000, while Whangārei is on $540,000 and the Far North $460,000 in the quarter to January.
However, Northland is experiencing significant declines in sales volumes, which is particularly evident in the Far North and Kaipara, although Whangārei is also noticeably down.
The number of house sales in the year to January was 3566 — down from 4415 the previous year— with 1855 houses sold in Whangārei, 1100 in the Far North and 611 in Kaipara.
The three most expensive houses sold in Northland in the last 12 months were $6.2 million on Opito Bay Rd in Kerikeri, $4.5m on Nook Rd in Parua Bay and $3.9m on Pitt St in Russell.
OneRoof editor Owen Vaughan said where investors and first home buyers used to compete for affordable properties in Northland, the retreat of the former has given the latter an opportunity to get on to the property ladder.
"For investors, it's about affordability and yield and the return they'd get is less than other parts of the country such as Whanganui where there's huge investment on properties.
"Also, changes in rental laws have made investors cautious about entering the market, hence opportunity for first home buyers because it means less deposit, fewer restrictions on new build, and the cost of borrowing is cheaper," Vaughan said.
He said there was a lot of demand in Whangārei for entry-level houses due to a rise in population that has caused affordability issues.
The median house price in Whangārei in the last five years went up 74 per cent or an increase of $200,000 which has caused a strain on the market - especially for investors, he said.
Investors retreating was not good for renters as it could result in a shortage of rental properties and a rise in rents.
This beachfront house on One Tree Pt, sold for $2.35m, was the most expensive residential property sold in Whangarei in the last 12 months. Photo / OneRoof
Financial adviser for New Zealand Home Loans Whangarei south, Ralph Correa, called on the Government to remove the $400,000 cap put in place since 2016 for first home buyers under the Home Start Grant.
Government's First Home Grant lowered first-home loan deposit requirements to 5 per cent from October 1 last year.
However, there's been a cap in Northland of $400,000 since 2016 on the value of the house under 5 per cent deposit.
Then there's KiwiSaver Home Start Grant. For purchasing an existing home, the grant is between $3000 and $5000— up to a maximum of $10,000— based on $1000 for each year of KiwiSaver membership.
For building or purchasing a new home, or for purchasing land to build a new home on, the grant is doubled to $2000 per year of membership in the scheme, up to a maximum of $10,000 for five years of KiwiSaver for each member.
"Although the Government has further reduced the loan deposit requirement to 5 per cent, together with KiwiSaver, first home buyers are completely shut out because there's nothing in Whangarei within $400,000.
"If the Government increases the cap to $500,000 it will make a lot of difference. Otherwise they'll have to look in other areas where they can afford to buy," Correa said.
Ministry of Housing manager market and supply response, Caleb Johnstone, said the Government has made a number of adjustments to the house price caps.
In December 2018, he said the Government increased the house price caps for the First Home Grant new builds for the rest of New Zealand, including Northland, from $450,000 to $500,000.
"Changes were also announced in September by the Government to the First Home Grant and First Home Loan. This allowed multiple buyers to combine their First Home grants as deposits for new and existing builds, and reduced the deposit required to be eligible for the First Home Grant and First Home Loan from 10 per cent down to 5 per cent," Johnstone said.
