Property market not all doom and gloom

Banks’ were stress testing mortgage applications at 7% - this has now risen to 8% - and the steep loan-to-value ratios were reintroduced meaning investors needed 40% deposits and home owners 20%.

Despite predictions of house prices slumping up to nearly 30% from peak to trough, there have been few forced sales so far and home owners are retaining their jobs and pay rises have been above the rates of inflation.

However, in its latest Financial Stability Report, the RBNZ has told banks, businesses and borrowers to brace for financial stress that will “test resilience”.

It says rising interest rates have reduced how much people can borrow to buy a home and the attractiveness of property investment.