Need a home? First find $122,000

Couples saving to buy their first home now need to find $122,000 for a deposit on even the cheapest houses, a government report says.

For individuals the average required rises to $170,000.

Figures prepared for the house prices unit say couples in rental homes and unable to buy in even the cheapest 25 per cent of the market need an average deposit of $122,000.

The averages are based on people who cannot at present afford to buy a lower-quartile home being able to service a mortgage considering property prices, interest rates and repayments not exceeding 30 per cent of household income - a common benchmark used to avoid mortgage stress.

The unit report was prepared in December before most banks raised interest rates in the face of the international credit crunch, which could increase the deposit required.

Housing Minister Maryan Street played down the $122,000 figure last night, stressing it would be wrong to say that that was what was needed by a couple on the average wage looking to buy a first home.

A spokesman said it was based on the average deposit required if every household in New Zealand was to buy a house and sustain a mortgage - that is, 100 per cent home ownership.

"It therefore includes people on very low incomes, including beneficiaries, who have very little spare income to service a mortgage and would therefore require a very large deposit.

"It significantly skews the size of the deposit which would be required for a couple on the average income and it would be seriously misleading to suggest otherwise," he said.

Many people could also afford to pay more than 30 per cent of their income for mortgage repayments, so needed a smaller deposit.

However, the $122,000 figure provides a stark illustration of the difference between New Zealand homeowners and those left behind as property prices soared 80 per cent since 2002.

The increases have seen the proportion of couples in rental accommodation and able to afford a lower-quartile home drop from 59 per cent in 2000 to less than 30 per cent.

Quotable Value statistics for the quarter ending in September put the national lower-quartile price at $261,000 and below.

The news for Kiwis aspiring to the dream of home ownership looks set to worsen, with new figures yesterday suggesting it will be harder to save for a first deposit as rents rise by nearly a fifth in some areas.

A quarterly rental survey by Massey University shows the national median rent increased 3.4 per cent  since November and by more than 7 per cent  since February last year.

Interest rate rises are likely to be a factor in increased rents as landlords reset mortgages at higher rates.

The unit report says increased rents had seen the number of people receiving the maximum accommodation supplement increase from 40,000 in 2005 to 60,000 last year.

The Government has unveiled a range of policies to make housing more affordable, including plans for more than 6000 affordable homes in Auckland and moves to streamline consents for building large-scale projects.

- © Fairfax NZ News