Loan change 'could hit Wanganui hard'

Wanganui homeowners should steel themselves for another hit on their property values as the impact of Government efforts to dampen the escalating Auckland property market kick in.

That claim is coming from Labour Party housing spokesman Phil Twyford, who said Wanganui home owners could sees thousand of dollars peeled off their homes' value.

Mr Twyford said the Reserve Bank's loans-to-value ratio, which came into force on October 1, may work in Auckland but the effects on regions such as Wanganui were being ignored.

He said the change could see Wanganui properties stripped of thousands of dollars in value because of the Government's determination to "meddle" in the housing crisis.

"Based on the Reserve Bank numbers, they risk seeing thousands of dollars wiped off their house values."

He said using the latest Quotable Value data on values around the country, Wanganui was one of those regions likely to be hard hit. There were a number of other regions which would "take a hit" including the Far North, Whangarei, Thames-Coromandel, Tauranga, Rotorua, parts of Rangitikei and Taranaki.

Mr Twyford said in the worst case values could drop by more than $5000 or increase by just $300 based on average house values in September. In both Ruapehu and Rangitikei districts, values could drop by as much as $13,000.

He said it was clear the Government had not thought through the full effects of the LVR lending limits, either as it impacted on first-home buyers or parts of the country where prices were static or already declining.

"The way LVRs have been applied is a one-size-fits-all. Homeowners in Wanganui risk ending up as the collateral damage of a policy designed to dampen demand in the Auckland market," he said.

The policy could hit regional economies. "Wanganui has seen house prices rise by an average of 1.2 per cent in the 12 months from September last year. But if you apply the Reserve Bank formula, then you could look at a $300 increase in value for one house or a $5000 decrease in value for another in Wanganui."