Property experts have called for first-home buyers to be exempt from tight borrowing restrictions, saying more than 1 million Kiwis have been locked out of owning a home.

Property Institute of New Zealand chief executive Ashley Church said the main barrier preventing roughly a quarter of New Zealanders from living in their own home wasn't affordability, but loan-to-value (LVR) restrictions.

The restrictions were designed to prevent banks from taking on too much risk and to take some heat out of the housing market.

Estate Institute of New Zealand Manawatu spokesman Andy Stewart and Palmerston North Mortgage Link adviser Craig Seton agreed the rules were having a harmful effect on first-home buyers.

Recent figures from Statistics New Zealand have revealed that 78 per cent of those currently renting – or 458,000 households – have a net worth of $120,000 or less, which means they cannot afford the 20 per cent deposit on the average New Zealand home required under the Reserve Banks rules, Church said.

Stewart said some people who had been looking to buy their first home had given up since restrictions were introduced in 2013.

"I believe applying the LVR to first-home buyers is wrong. First-time buyers are the most important in New Zealand, everybody deserves to be able to buy their own home.

Without people entering the housing market there were less opportunities for homeowners to sell and move into mid-priced or higher-priced houses and the market would stagnate, he said.

"Some of the people who didn't have the 20 per cent have managed to save and are now in a position to buy.

"But there's no doubt a lot of people out there who've got the [previous minimum of] 10 per cent are struggling to get the rest."

Seton said the negative effects of making it more difficult for first-home buyers went beyond the economic costs.

"It's bad for the wellbeing of our communities. Home ownership is central to building stability for young families."

Earlier this year, changes were made to the HomeStart grant scheme, which increased the cap for a house to $550,000 outside of Auckland.

Changes would also be applied to Welcome Home Loans, which enabled first-home buyers to buy with a 10 per cent deposit while being exempt from LVR limits.

The Property Institute, Stewart and Seton want the exemption to apply to all first-home buyers.

Seton said the changes were easing the tough situation, but he would like to see wider exemptions for people who weren't eligible for either scheme.

"If their incomes aren't strong, or they haven't been in their job long, people will have to either hit up mum and dad for [help] or just wait and save even longer."

How affordable is a deposit on a Palmerston North home for the average worker?

The average Palmerston North house costs $325,041, which requires a deposit of $65,000.

That's one year and three months' worth of the average Palmerston North income, $52,470. 

In the city's most affordable suburb, Westbrook, the average worker will need 10½ months' worth of wages for a deposit on the average house, worth $230,100.

Up around Summerhill Drive in Fitzherbert, the city's highest-priced area, the average house costs $508,100.