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The number of people owning their own homes is expected to rise as interest rates fall and borrowers enjoy savings of about $7000 a year on mortgages.
Auckland loan specialists Cairns Lockie have calculated that people paying about $32,000 a year at last year's high interest rates of 10 per cent could be soon paying $25,000 if rates fall to 7 per cent.
House prices have also fallen over the past six months, the business says, and 10 per cent to 15 per cent discounts are not unusual.
The drop in prices coincided with mortgage rates falling and there is a prospect of further cuts, all helping house buyers.
"The affordability of buying and owning a house is improving," Cairns Lockie said.
"This is particularly important to first-home buyers, because each 1 per cent drop in rates means considerably more people can enter the market."
Most banks cut their interest rates last week, some to just below 8 per cent, after the Reserve Bank reduced its official cash rate to 6.5 per cent.
Kiwibank, Westpac, TSB and ASB have reduced rates, and other banks are likely to follow.
Real Estate Institute past president Murray Cleland said interest rates had been too high.
It was common sense that if they came down to about 7 per cent, that would benefit first-home owners.
They could also benefit from cheaper houses, although Mr Cleland thought the fall in prices had been exaggerated.
There had been attention on sellers who, because of financial pressure, used sale tactics such as the $1 auction reserve Browns Bay house featured in yesterday's Herald.
"Prices have certainly eased off, but there is no panic at this stage."
Mr Cleland said New Zealand was not like the United States, where there had been huge numbers of mortgage default foreclosures.
"The market will level out and it will be business as usual."
He said the lower rates would give people with roll-over mortgages more cash in the hand and make them better able to hold on to their properties.
Mike Pero Mortgages chief executive Shaun Riley said the Reserve Bank's 1 percentage point interest cut would help restore confidence to the housing market.
"Now is a good time for first-home buyers and property investors," he said.
"House prices have fallen over the past year, and with the prospect of lower interest rates, things are finally starting to look up for those wanting to buy their first home or invest in property."
People with a $200,000 mortgage could be saving about $40 a week, he said.
Lincoln University property studies professor Chris Eves said falling property prices had resulted in people owing banks more money than their house was worth.
He said up to 130,000 people might now have negative equity in their houses.
Professor Eves said these were people who borrowed more than 80 per cent of their home's price in 2006 and last year.
It might take five to seven years for houses to recover their value.
Those forced to sell were most affected by the negative equity trap.
