Low socio-economic areas feeling the pain of soaring house prices

Katie Bradford
Source: 1News

Communities are being torn apart as soaring house prices rock some of our lowest socio economic areas.

1 NEWS asked CoreLogic to look at what suburbs have faced the fastest growing house prices in the last year.

Six out of the top 10 suburbs are in Gisborne – around Kaiti, Te Hapara and Mangapapa.

In Outer Kaiti, the average house price has skyrocketed 41 per cent in the last 12 months to $379,000.

In Whanganui, a house in Durie Hill will now set you back more than $550,000 while in Flaxmere it’s more than $450,000

Monte Cecilia’s Bernie Smith says it’s creating “a generation of homelessness and poverty” as high housing prices lead to higher rents.

In South Auckland’s Otara, the average house price is over $770,000 while in Wainuiomata, it’s $647,000.

Wainuiomata locals told 1 NEWS it’s changing the face of their community and it’s scary for those who’ve lived there for years and now can’t afford to buy or rent there.

Monte Cecilia helps house people in South and West Auckland. Mr Smith says his community group gets 20 to 30 calls a week from people desperate for help.

In Gisborne, a number of factors are increasing its popularity, including the available of cheap or affordable homes and a booming economy.

CoreLogic’s Nick Goodall says 45 per cent of buyers in Gisborne have been investors.

“The appeal of course that there is some potential long term capital growth in those areas and also that it's easier to get larger sums of money when you're borrowing from the bank when you're buying at the lower end of the market,” he told 1 NEWS.

Reserve Bank figures out today show new records smashed when it comes to lending – over $10 billion.

Investors borrowed over two billion dollars over that, with first home buyers lending figures reaching the $1.7 billion mark.

Tougher loan to value restrictions for investors kick in on Sunday.