"There is going to be a generation who potentially has to wait for inheritance almost to get themselves on the property ladder."
If a person was earning the average wage, about $55,000, and wanted a $500,000 home, they would need $100,000 for a 20 per cent deposit - a total that would take "10-plus years" to save, he said.
Real Estate Institute chief executive Helen O'Sullivan said it was disappointing if LVR restrictions were stopping potential home buyers from being able to achieve a deposit.
She said while median house prices in Auckland and Christchurch had "moved up considerably", there were properties in other parts of the country in a more modest price range.
Mike Pero Mortgages national manager Simon Frost said it was a "misconception" that home buyers always needed a 20 per cent deposit.
The Reserve Bank ruling said a bank could lend up to 10 per cent of their mortgages above the 80 per cent mark, he said.
"So if they write 10 mortgages below 80 per cent, they can write one above 80 per cent."
There were also exceptions, such as for people who wanted to build a home, who would only need a 5 per cent deposit, Mr Frost said.
Squirrel Mortgage Brokers chief executive John Bolton said when the LVR was introduced there was a "huge dip" in people looking to buy homes and the levels had not yet recovered.
But he said young people had not left the market - and many were saving far better than before the GFC, where 100 per cent mortgages could be achieved.
"Young people generally these days are in much better shape than they were six or seven years ago ... they're pretty disciplined," Mr Bolton said.
The data also showed Gen Y had increased borrowing through personal loans and credit cards, which indicated a shift in their spending habits.
Veda New Zealand and International managing director John Roberts said the group's behaviour suggested they were seeking to borrow for purchase on consumer items or travel, and had given up a desire for home ownership which might appear unattainable.
Couple say 20% deposit 'unachievable'
One member of Gen Y, 26-year-old Shannon Eydt, said she and her partner had found saving a 20 per cent deposit for a home in Wellington unachievable.
"We were quite seriously looking before they put the deposit up to 20 per cent."
She and partner Nicholas Larsen, 31, would have used both of their KiwiSaver nest eggs to make up a deposit, she said.
Mr Larsen works in the aviation industry and Ms Eydt works as an administrator at a local charity.
Once the Reserve Bank installed new restrictions on lending to borrowers with mortgage deposits of less than 20 per cent, they were both "out of the house-hunting game for a while". The couple now budgeted to "travel, go out and go shopping", Ms Eydt said. They had considered moving to the South Island or to Australia to buy cheaper property.
"If we stay in Wellington I'd say we'd probably need to save for another five years or so."
They still hoped to hop on the property ladder, but realised it would not be for some years yet.
