14 Jun 2015

Warning of potential for 'apartment bubble'

6:36 pm on 14 June 2015

The Property Institute is warning of an "apartment bubble", if two outcomes to Auckland's housing market happen at the same time.

Auckland city deprivation

Photo: RNZ / Nicole Pryor

Its chief executive Ashley Church said it had been suggested that the Reserve Bank was investigating capping mortgage levels based on borrowers' incomes, in an attempt to cool the market.

He said there had also been talk of banks considering dropping the deposit threshold for apartments.

Mr Church said if these things did happen, buyers might be left with no choice but to buy an apartment because it would be the only thing they could afford.

"It essentially means that apartments would be the only form of property that both home buyers and property investors would be able to afford to buy."

Mr Church said although it was hypothetical at this stage, it was likely the Reserve Bank was considering anything that might slow down house price inflation in the Auckland market.

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