First home buyers are hit hard

First-home buyers in Hamilton are some of the hardest hit in the nation by the Reserve Bank’s restrictions, prompting Labour’s Phil Twyford to call for a regional exemption to the loan-to-value ratios (LVR).

Quotable Value showed the number of Hamilton first-home buyers had decreased by 4.8 per cent in December and January – the third highest reduction across all regions measured – with only Wellington and Napier worse off with declines of 5.4 per cent each.

The number of first-home buyers in Auckland increased 1.1 per cent.

LVRs were introduced in October to cool the red hot Auckland and Canterbury housing markets but Mr Twyford, Labour’s spokesperson for housing, said the regions were paying for it.

‘‘There’s no good reason why Hamilton should have to pay the price for government’s failure to deal with Auckland property speculators because that’s what’s happening,’’ he said.

The figures showed a flurry of activity in May before the speed limits were put in place. But then national figures showed sales to the first-home buyer, which held at around 20 per cent, dropped to 18 per cent, its lowest mark since 2010.

In Hamilton, first-home buyers used to make up 23 per cent of the market but were now at 18.2 per cent and Mr Twyford said the 20 per cent minimum deposit had kept them out of the market.

‘‘These LVR lending restriction have really hit regions hard and Hamilton particularly so.

‘‘The average buyer in Hamilton now needs a $72,000 deposit so how achievable is that for the average Hamiltonian who is earning a living and paying tax on their wages and salary? Almost impossible.’’

Auckland and Canterbury accounted for 95 per cent of house price inflation, Mr Twyford said, and he repeated calls for a capital gains tax. ‘‘We think they should tax property speculators with a capital gains tax that excludes the family home. That would make a big difference to settling the market down a bit.’’

He said Labour would flood the market with affordable homes as part of the Kiwi Build policy to ease the ‘‘acute shortage’’ of land and houses and bring down prices. ‘‘We would just build 10,000 starter homes every year for first-home buyers.’’ He said the LVR policy disadvantaged people at the bottom of the property ladder.

‘‘They were panicking about the Auckland housing market causing so much inflation and they didn’t think through the consequences. They didn’t think about first-home buyers and they didn’t think about regional New Zealand.’’