Real estate agents say that although house sales are beginning to pick up, new lending restrictions are still holding some first-time buyers back.
The Real Estate Institute says January house sales under $400,000 were 18 percent down on the previous January, as lending restrictions continue to have an effect.
Under loan-to-value-ratio (LVR) restictions introduced by the Reserve Bank last October, fewer people can buy with a deposit of less than 20 percent.
The branch manager for Mike Pero Real Estate in Glenfield, Barry Dobson, says first-time buyers are having to lower their expectations to get on the housing ladder.
"It wasn't that many years ago that you wouldn't think of buying a two-bedroom house as a first home," he says, "but now people do, because that's where they are price-wise."
One Auckland man says he expects to have to save for 10 years to buy his first home, and even then may have to leave his community and move to a town with more affordable housing.
Andrew Malele, who lives with his wife and two young children in a two-bedroom Manurewa unit, rented from family members, says that before the new lending restrictions came into force they had a 10 percent deposit saved and were ready to go to the bank.
"If push comes to shove and we can't get a house," Mr Malele says, "one thing that we're going to be sacrificing unfortunately might be our ties with our family and our community."