Industry leaders say the slowing housing market should offer millennials some hope, despite home affordability for first-home buyers being the worst it has been in 65 years.
Photo: RNZ / Nate McKinnon
The long running debate over who had it harder - millennials or baby boomers - has finally been answered.
"Definitely the millennials," said Infometrics chief forecaster Gareth Kiernan.
And young, house-hunting Kiwis on the streets are disillusioned.
"We were looking about a year now, it was hard then, but looking now we've just put it on hold because its just impossible," one first home buyer said.
Another said his family home just sold for double the price his parents bought it for.
"I have been grinding to buy a house but I have put it on the back burner. It's definitely harder than my parents for sure."
The responses were unsurprising to Kiernan.
"I know we've got inflation at a 30-year high at the moment but it's still nowhere near the rates we saw 40-odd years ago.
"So it does mean that millennials are facing a lifetime of debt."
Kiernan's comments come following a new report by Infometrics concluding it is harder than ever for first home buyers to get a foot on the property ladder.
However, industry leaders point to softening house prices as reason to hope.
Infometrics chief forecaster Gareth Kiernan Photo: RNZ / Rebekah Parsons-King
Kiernan said despite mortgage rates below 5 percent, today's house prices meant that first-home buyers faced much less favourable outcomes than their baby boomers parents did.
"The problem for your current first-home buyer is of course interest rates are already very low and they're paying astronomically high prices for housing.
"Basically by the time they get to paying off the mortgage in 25 years time, it's still going to be eating up a substantial part of your income."
Kiernan suggested greater political action was needed to ensure homeownership did not slip out of reach for more Kiwis.
National Party finance spokesperson Nicola Willis said the government should work with the Reserve Bank to keep interest rates low.
"That means more discipline in government spending, that means unblocking bottlenecks in the economy.
"It means ensuring that they don't add extra costs through something for example like a jobs tax."
However, Minister of Finance Grant Robertson said the market was already improving.
"We have seen improvements with the number of first-home buyers in the market and in the fact that we are now seeing house prices coming down, more access to them and more houses being built."
Lower prices means less savings for a deposit, and lower borrowings.
Minister for Finance Grant Robertson Photo:
Mortgage broker Michael Cooper said lower prices and a slowing market also gave buyers more options.
"Now you can possibly be the only person making an offer on the property. Just try and obviously offer less than asking price or try and get a better deal because every little bit helps when you are a first home buyer."
University of Auckland lecturer in Property Michael Rehm said the market was overcooked, and the country was witnessing a major correction.
"House prices don't always go up and I think what we are witnessing now is the psyche of buyers and sellers will come to the realisation that we have really over cooked things and we have allowed the fundamentals of rent and income to break free of house prices."
And that can give first-home buyers some hope.