Cautious banks are being blamed by some in the property industry for a lack of affordable apartments being built.
In the past year alone 35 apartment projects in Auckland were reportedly axed, including the Flo Apartments project in Avondale, which would have had 91 apartments, each priced from $370,000.
KPMG head of financial services John Kensington said the country's four big banks were acting to avoid repeating the housing collapse during the global financial crisis in 2008.
He said finance companies would in the past get $1 million to $5m a week in deposits and lend out the same amount, but when bank deposit rates fell they suddenly started to receive $20m or $30m a week.
"They needed to put that money to work to earn them interest, because they had to pay interests to the depositers, and they went out and invested in a whole lot of property developments. If you can remember back to 2008/2009, there [is] a lot of unfinished property around as a result of developers getting it wrong."
Banks are looking very closely at any property deal put in front of them, he said.
"They're being cautious, they're being sensible ... they're only lending to bankable developments. And with the sudden rise in price, with the unavailability of labour, and with some shortages of building materials, it's probably very difficult for a development that was priced two or three years ago to stack up."
Financial commentator Bernard Hickey said the first problem for developers was getting funding from banks.
"Secondly, they're finding it harder to sell their apartments off the plan ahead of themselves ... it's one of the other ways they fund. So this bank tightening of lending criteria has affected apartment developments in Auckland, and according to Colliers, has been a factor in 35 projects being abandoned in the last year."
Mortgage adviser Bruce Patten said it was not unusual for planned apartment developments to fall over.
"I've got one, two, three off the top of my head right now that have had clients with deposits returned."
He also put the problem down to tighter bank lending.
"The banks in the big development funding are starting to get a bit tighter and a bit harder and are starting to look at these bigger developments and going, 'well, we want a bigger slice. We want you to have sold more properties before we'll actually fund them'.
"They're worried about potentially a number of factors, but one may be a slight oversupply if we get all of these apartment blocks finishing at the same time."
Mr Patten said the nightmare scenario for banks was a glut of apartments for sale and not enough people able to borrow money to buy them.