THE Tauranga housing market is starting to feel the effect of lending restrictions introduced two months ago, but experts say it won't be until next year before the true impact is known.
First home buyers have dried up after an initial surge of activity before the October 1 loan-to-value ratio (LVR) changes, and before pre-approved loans expired.
And some buyers who have managed to get into a home without a 20 per cent deposit are borrowing as much as $60,000 from family to do so.
The share of new mortgage lending going to borrowers with low deposits halved in October, the first month in which the Reserve Bank's curbs on such loans applied.
LJ Hooker Tauranga principal Neville Falconer said there had been a noticeable decrease in activity from first home buyers.
"I don't think there is anybody that could argue that it hasn't affected the buyers who were relying on having deposits of less than 20 per cent, in particular first home buyers.
"There is no doubt it has affected activity in the market."
While there were other ways in which people could qualify for finance to beat the 20 per cent deposit - such as help from family, Welcome Home Loans and being accepted by a bank with a lesser deposit - there were still a lot less first home buyers getting into property, Mr Falconer said.
There had so far been no impact on values in the starter home category, which had stayed the same.
Mortgage broker Chris Rapson, of Rapson Loans and Finance, said first home buyers had stopped applying for loans.
"They have obviously given up on the notion of buying now, whether they have started a saving programme I don't know.
"There are instances where family are supporting, they are offering in some cases amounts of $60,000 or more - it's a lot of money to put at risk."
Mr Rapson believed there would be a flow-on effect on other levels of the property market.
"Until there's a new generation of people to buy [entry level homes], the people who are already in those properties can't upgrade because they won't find buyers to allow them to move on to the next level.
"That's going to have an impact on real estate market as people's aspirations change."
People with equity in their homes - including property investors - would be well-placed to take advantage of any decreased demand, Mr Rapson said.
Greg Purcell, franchise owner of Ray White in Mount Maunganui and Papamoa, believed the impact of the new loan to value ratio (LVR) was only starting to be felt, so had not yet shown up in statistics.
"It's almost happening as we speak. In another couple of months we will see the full effect.
"From what I understand anecdotally, it is certainly having an effect on the real estate industry in Auckland. The provinces are waiting to see the impact of that. We haven't got anything dramatic happening yet."
Mr Purcell described the Reserve Bank's move to target first home buyers "bizarre", and said it was unknown how long the restrictions - introduced to cool the housing market - would be enforced.
Ross Stanway, chief executive of Advantage Realty, which operates Bayleys and Eves, said people who had been unable to come up with 20 per cent deposit had been affected, but others were making the new rules work for them.
"There have been some other options available to people for finance - mum's and dad's money, alternative sources of finance - that's happening and has got some people across the line.
"People are pretty resourceful."
The LVR changes had increased the role of mortgage brokers, as potential borrowers tried to pitch their proposal favourably to banks if they had less than 20 per cent deposit.
The changes had also served to make Tauranga and the Bay of Plenty more appealing to buyers from Auckland.
"We are getting increased enquiry from Auckland buyers, because 20 per cent deposit on a house in Auckland will be 25 or 30 per cent in some parts of Tauranga or the Mount."
There was still activity in the starter home market - boosted by investors returning to the market, Mr Stanway said.
And there had been more activity and sales in the median and above median market, by buyers who were not affected by the LVR requirement.
"There are still good volumes of total sales, but probably there's been a bit of a shift from the median and above."
Mr Stanway noted that recent QV figures showed prices were still going up in Auckland and Christchurch - the regions the new LVR rules attempted to address.
He believed a better way to correct the market would be to increase supply.