Dunedin and Queenstown real estate commentators are predicting tough times for lower income earners wishing to become homeowners.
The Reserve Bank is understood to be close to introducing restrictions in an effort reduce the amount of high loan-to-value (LVR) borrowing, making it much harder to secure a mortgage with a deposit of less than 20%.
Mortgage Link co-owner Jill Clearwater, of Dunedin, said the restrictions would make it more difficult for young people to afford a home.
''Young couples struggling to pay rent are probably going to be caught in this difficult position because a lot do borrow at that 85% margin,'' Mrs Clearwater said.
Dunedin couple Chloe Ford (24) and Phil Johnson (25) have recently bought a home at a more affordable location in Mosgiel.
Ms Ford works as a retail manager and her partner as a builder. Without being part of the KiwiSaver scheme or borrowing about 90%, they would not have been able to buy.
''There is no way we would have been able to afford a house,'' Ms Ford said.
''We are lucky we got in when we did, because I heard on the radio this morning that if you haven't bought a home already, you may as well kiss that goodbye.''
Queenstown Real Estate Institute of New Zealand spokesman Kelvin Collins agreed the home loan restrictions would make it harder on first home buyers, especially those in Wakatipu.
He said the 20% threshold would mean buyers were looking at $80,000 minimum deposit on a property listed at Central Otago's median price of $410,000, down on last year's $465,000.
''If they can't buy, they are going to rent. For buyers of the top end property, there will be no real implications, but unfortunately it is going to hurt the people that need looking after.''
He said it would be tough for anyone who did not have a parent or a guarantor to help them financially, and he expected guarantors would become more important.
The bank acknowledged last week there was a risk of borrowers seeking second and third mortgages or going to finance companies for loans.
Mr Collins said the Reserve Bank's restrictions were driven by the booming Auckland property market. House prices in inner city suburbs had increased dramatically as Aucklanders looked to relocate to those areas to avoid the city's transport congestion issues.
The median price for an Auckland home for June was $555,555.
''Dunedin and Otago's real estate markets are under control. It is pretty tough to penalise the rest of the country for Auckland's transport woes.''
Reserve Bank head of communications Mike Hannah said submissions on the proposed LVR changes closed on July 3 and the Reserve Bank was working through submissions from banks and the general public.
Like Mr Collins, some submitters linked LVRs to current housing market risks and argued the fix was localised around Auckland and Christchurch, he said.
Submitters were concerned the LVR changes unfairly penalised buyers outside these areas.
The bank has acknowledged that a targeted cap on particular regions was possible, but argued it was impractical.
Mr Collins said a better resolution for hiking property prices would be better urban designs of affordable apartments rather than the focus on stand-alone homes for first home buyers.
He hoped New Zealand's high proportion of home ownership would not take a hit, but predicted a shift towards an increase in the rental market.
Dunedin's median house price for June was $266,875, which would require a $53,375 deposit.
Real Estate Institute of New Zealand Dunedin spokeswoman Elizabeth Nidd said she understood the Reserve Bank's need to act, but felt the ''one size fits all'' approach was the wrong one.
''It is unfortunate they have taken a blanket approach.''
''It's a lot of money for young people to save.
''It [home ownership] is still within reach, but may take them quite a lot longer to get there.''
Her advice was to ''shop around'' when looking for a loan.
Mortgage broker Daryl Taylor said most first-time buyers could save a 10% deposit for a house in the lower range of Dunedin house prices. He said one down side of the proposed LVR was a part of the population could miss out on home ownership altogether.
''Wealthy families will be able to pass their wealth on, but some people may have to rent and it will stop them owning a property for the rest of their lives.''
Dunedin Methodist Mission director Laura Black said the changes had the ability to work for and against lower income earners.
''Of course, it is a good thing that people who will struggle to pay the loans back are not put in that position.
''If fewer are buying, then more are renting and prices are going to go up. That is our concern.
''We expect to see some additional stress on lower-income families.''
One mortgage broker suggests the Reserve Bank could examine other ways to cool the housing market.
Mike Pero Mortgages director Mike Pero said it would be better to look at the ability of borrowers to repay loans rather than the amount they were borrowing. ''Serviceability is probably the thing you've got to get right first as a lender, because you'll never have to call in the loan if the serviceability is right.
''So maybe they [the Reserve Bank] could have looked and negotiated with banks - a little bit of self-governance could have achieved the same result, rather than just a blanket LVR cut across the top.''
Median house prices
• Queenstown: $517,100
• Central Otago Lakes: $410,000
• Dunedin: $266,875
• North Otago: $221,500
• South Otago: $164,000
• Invercargill: $219,000
• Gore: $173,000
• National: $394,000
