Few Northland rentals available: 'It's really grim out there'

The government's new housing policy will likely make Northland rental property squeeze even tighter, a Northland real estate agent says.

The sweeping changes designed to tip in favour of first-home buyers were unveiled on Tuesday and include increasing the caps for financial support and extending the bright-line test to 10 years.

Former National MP for Northland Matt King said the changes made rental properties an unattractive investment.

"Every reasonable town in Northland is short of housing. The real estate agents have got nothing to sell, there's very few rental properties available," he said.

"It's really grim out there, it's pretty tough."

The latest Real Estate Institute of New Zealand records showed the median house price in Northland was sitting at $655,000.

At the same time last year, the median house price was $560,000 - nearly $100,000 increase in one year.

Under the government's new policy, the price cap to be eligible for a first-home loan stayed at $500,000 for a new build and $400,000 for an existing property in the Northland region.

King said first-home buyers had not been helped by the changes either.

"My own son was looking at buying a property and the value went up $100,000 in one month. He said to me, 'How am I going to save the money, I can't match that'.

"There's no opportunity for young people and first-home buyers... I think the idea is to get some more houses built."

Ray White Kaitaia director Sean Stratton said landlords would either hike rents or put property investment in the too-hard basket all together and sell their properties.

He said the region was facing a housing shortage and demand for rental properties in the mid to Far North was huge.

Mayors give infrastructure boost tick of approval

The government's announcement also included a $3.8 billion contestable fund for infrastructure to fund the roads and sewerage connections normally paid for by developers and councils.

Far North Mayor John Carter called the infrastructure fund a "huge opportunity" and the council was looking to grab it with both hands.

"It's what's been missing for so long, it's why we are in the position we are. It's great to see we at least have a small start we can all grow on."

He said work was already underway on a proposal with iwi and council building partners.

Kaipara District Mayor Jason Smith also welcomed the infrastructure announcement.

He hoped that the government pitching in to help bury the pipes would help pave the way for housing development, without burdening ratepayers.

Smith was waiting on more detail from the government on the funding, but called the announcement "very exciting".