If the prices don't get you down, the headlines will. "Property prices reach new high", "Auckland house values soar" and "Hamilton house prices tipped to rise" provide a flavour.

Comparing cost with income, New Zealand homes are among the world's most expensive. The latest Demographia International Housing Affordability Survey found the average value in Auckland was 6.4 times the city's annual average household income - less affordable than New York (6.2) and Los Angeles (5.7).

It's no wonder that, according to the last census, fewer than 30 per cent of those aged under 40 owned or partly-owned the property they were living in.

According to the Roost home loan affordability series for interest.co.nz, it takes 46 per cent of a median income of a person in the 25-29 age group to pay the mortgage on a lower quartile-priced house - one that's affordable for families when both adults work.


Yet banks report a surge in interest from would-be first-home buyers. Kiwibank says first-home buyers have increased to about 15 per cent of overall mortgage business.

For many it might be now or never. And mortgagee sales may rise as some entering the property market discover - belatedly - they've overreached financially.

The experts agree adjusting your expectations is a significant step in getting on to the property ladder. Combine realism with research, and perhaps a bit of financial help, and owning that first home could be closer than you think.

1. My house, my castle
Whether you're buying an investment property or home will dictate your approach. If the former, are you buying where lots of people want to rent? If the latter, what's right for you?

One might lead to the other. It might make sense to buy an investment property in an area you can afford rather than hoping for a home in an area you can't. You can sell the investment property later or use it as equity when buying your own home.

Or you can take several steps to reach your dream home, upgrading with each move. If you want a villa in Mt Eden, you might have to make do with a brick-and-tile in Mt Albert first.

2. Hot property
Getting to know the market could be crucial. The more time you can spare the better, even if it means a dozen open homes every weekend.

Debbie Roberts, who runs coaching programme Property Apprentice in Auckland with husband Paul and business partner Ken Hight, says buyers should be market experts in their chosen area, know the type of property they're seeking and how much they can afford to borrow.

As with all professions, some estate agents are better than others. Ms Roberts says take time to build rapport with those you like, and remember they're working for the vendor, not the buyer. Once they understand what you're looking for, a good agent may contact you first when the right property comes along.

Gareth Berry did it the hard way. After four months, more than 200 open homes and the disappointment of being outbid at multiple auctions, the 34-year-old technology worker paid $880,000 for a Mt Albert house with a capital value of $630,000.

"Persevere, do your homework and keep trying," he says.

3. Location, location, location
Vanity addressing was all the rage at the height of the boom, and still is among some agents. It works the other way too. If you want to buy in a particular suburb, consider a property a couple of streets over to save a sizeable sum.

Homes in the sought-after Auckland Grammar zone cost significantly more than those a few streets outside it, says Andrew King. If you've got no children, or will compromise on their school, widen your horizons.

Catherine Sutton and husband Brent have been looking for a three-bedroom home in Auckland up to $650,000 for a month. High priorities are a good primary school zone, public transport and a backyard for future children. But they're more flexible after realising they won't get all of that.

"We're beginning to consider suburbs like the Sunnynook edge of Forrest Hill and parts of Glenfield [on the North Shore]."

Eight months ago, 30-year-old health worker Tien-Huey Lim was months into a search for an investment property in Auckland's Mt Wellington, with little luck.

After compromising on location, and extending her search area, she paid $615,000 for a block of three units in Mangere in September.

4. DIY rescue
Unless you have lots of time or a bent for renovations, DIY can seem too hard. But if you can live with mess and spend a bit more cash, you could speed your progress.

Rachel Grunwell and husband Damien Buckley spent almost two years restoring a 100-year-old Mt Eden villa. Although dilapidated, it was close to work and good schools, north-facing and leak-free.

By doing as much work themselves as possible, they revamped the house within their $200,000 budget, including lifting carpet and polishing floors, restoring fireplaces, adding a kitchen and redecorating.

5. Mortgagee auctions
No one likes revelling in someone else's misfortune, but mortgagee auctions can yield big bargains. Mortgagee sales are at record levels, many owners paying for borrowing too much during the last property boom.

At a recent Wellington mortgagee sale, a house and two sections valued at more than $1.4 million in the sought-after inner-city suburb of Roseneath went for $558,000.

An Albany home with a valuation of $780,000 sold for $600,000 and a portfolio of four Auckland properties valued at $2.1 million sold for $1.5 million.

But a word of caution. Helen O'Sullivan from REINZ says not every sale at mortgagee auctions is a bargain and buyers should do their homework on the properties.

6. Whose house is it anyway?
You can do all the research in the world, but without money, you won't reach the bottom rung on the ladder. If you can't get a big enough deposit you could go into partnership with a mate. But make sure the transaction is based on a legally binding agreement, not a drunken handshake down your local.

Alternatively, you may have parents willing to help. Even then, both parties should get independent legal advice and a written agreement.

Helen O'Sullivan says the safest option is for parents to borrow a set amount against their home and loan it to their child under a legally-approved agreement.

Having a set amount means parents are not guarantors, so the deal does not put their home at risk and there is an agreed repayment plan.

One woman settled on a $235,000 inner-city Auckland studio last month thanks to some financial support from her brother. Without it, she wouldn't have been able to get on to the first rung of the property ladder.

"The banks won't lend much money on a small apartment. You need 50 per cent deposit - it was out of the realm of possible," she says.

Faced with increasingly high rents, she asked her brother for help. He offered to use his house as equity for the mortgage and the pair have signed a written agreement for her to repay the the loan over 15 years.

7. Kiwifruit
KiwiSaver expert Mary Holm says the scheme is "definitely" the best way to save for a first home, even though it was set up primarily as a platform to save for retirement.

There are two ways to access your account. If you've been a member for three years you can withdraw all your contributions (and your employer's) to put them towards a deposit on a first home. You won't get the $1000 government kickstart or member tax credits and you'll have to prove the withdrawal is for a house.

Or you can apply for the first home deposit subsidy, open to people who earn below a certain amount - a combined income of $100,000 for two people buying a property and $140,000 for three or more.

The subsidy, handled by Housing New Zealand, gives three-year Kiwi-Saver contributors $3000, four years $4000, and five years or more $5000.

If buying with someone else who's also eligible, you can combine your subsidies to a maximum $10,000.

Employees must have been contributing at least 2 per cent of their pay. The unemployed or self-employed should check the Housing NZ website (www.tinyurl.com/kiwisaverfirst-home) for regulations.

If the subsidy is used, the house cannot cost more than $400,000 in Auckland, Wellington and Queenstown Lakes District, or more than $300,000 elsewhere.

Ms Holm urges people to apply for the subsidy early because the slow wheels of bureaucracy could mean they miss out on their chosen home.

"Before you go hunting for a home, get in touch with Housing NZ."

One Auckland couple who moved into a renovated four-bedroom bungalow in Ellerslie last month said they wouldn't have been able to do it without accessing $20,000 from KiwiSaver.

"We'd made the decision to go backpacking before buying a house which meant we didn't have much of a deposit," said Victoria Black. "We had some savings and my husband's KiwiSaver money gave us just enough for a deposit. Without KiwiSaver we'd still be renting."

8. Cash battle
They might not advertise it, but some banks will still provide 95 per cent mortgages, depending on the circumstances of the applicant.

Good brokers and mortgage advisers deal with several banks so know the range of lending products available and can find the best deals.

Some of the best are registered financial advisers, which means they are governed by the Financial Markets Authority and subject to a disciplinary procedure if they provide a faulty service.

Financial adviser Tracey Munns, chief executive of personal finance management service Wealthwise, encourages borrowers to shop around for the best deal.

The differences can be substantial. One bank offered one of her Wealthwise members a $1000 contribution to legal bills and 0.2 per cent off an advertised fixed rate. Another lender offered a $1000 contribution to legal bills, 0.4 per cent off a fixed rate and $1000 cashback.

Another first buyer who was borrowing at 95 per cent for a $390,000 loan got $2000 in legal fees and had the low-equity fee charge discounted from $3895 to $1950.