Real Estate Institute says sales down and builders seek exemption as orders dry up.
First-home buyers are panic buying to get on the property ladder since the mortgage lending restrictions came in, property experts say.
The buyers are opting for anything they can afford to secure their pre-approved mortgage after the Reserve Bank implemented restrictions on loan-to-value ratios (LVRs) under which most home buyers must have at least a 20 per cent deposit.
The comments come as the Master Builders Federation lobbies the Reserve Bank for an exemption for new house builds as building inquiries dry up.
Real Mortgages director Stuart Hawes said many first-home buyers were taking anything they could in their price range just to get in the market before their pre-approval could be pulled by a bank.
"It was a mad panic when it was first announced," Mr Hawes said. "The phones didn't stop ringing here."
He said "a hell of a lot of people are disheartened" and were either quitting the market or getting savvy by using parental homes as security, taking a personal loan, or buying a home with friends.
Mr Hawes said it would force many vendors to sell over 30 days by negotiation instead of at auction which was a costly exercise for buyers who had to get inspections, valuations and LIM reports often for more than one property.
Real Estate Institute figures out yesterday showed there were 6778 unconditional residential sales in October, a 2.1 per cent increase on October last year, and up 0.9 per cent from this September.
But REINZ chief executive Helen O'Sullivan said on a seasonally adjusted basis the volume of residential sales fell 4.1 per cent, indicating that sales in October were not as high as would normally be expected.
The statistics came after the Master Builders Federation met the Reserve Bank asking for an exemption for new house builds because of housing stock supply concerns.
"We are trying to get sufficient evidence to prove to the Reserve Bank that it is actually affecting supply more than they thought and it's counter-productive to what they are trying to achieve, and we are asking for an exemption," said chief executive Warwick Quinn.
He said the LVR restrictions had resulted in an immediate drop in sales inquiries with builders which had grown to about one-third of all new builds.
People in regions throughout the country were being hit through Auckland's woes, he said.
The Reserve Bank's loan-to-value ratio restrictions make it harder for home buyers to get a mortgage without a deposit of 20 per cent.
Ways around the restrictions
* Parental security
* Personal loan
* Group buying.