The Reserve Bank's move to toughen up the rules for property loans looks like it will drive a sizeable number of investors from the market.
A survey by Horizon Research has found 22 percent of those who were definitely going to buy an investment property during the next 12 months say they will no longer buy once required deposits go above 30 percent.
Another 21 percent will delay their plans to buy a property, 34 percent say it won't make a difference to their plans and 24 percent are unsure.
The Reserve Bank announced on Tuesday that from September, it wants to increase the deposit requirement for most property investors to 40 percent. The banks would still be able to make 5 percent of their investor loans to people with a deposit of less than 40 percent.
The new rules are technically still a proposal, but Westpac has wasted no time putting the new rules into place. It announced on Wednesday that it is no longer taking new loan applications from investors with deposits of less than 40 percent.
Westpac's move will encourage the other banks to do the same. No banks want to be the last in line, because they don't want to be swamped with people seeking a low-deposit loan.
Horizon's survey found that the new policy will have a slightly greater impact in the Auckland market. Twenty-nine percent of the Auckland respondents who definitely wanted to buy a property said they will not buy if the deposit requirement increased above 30 percent. Seventeen percent said they would delay buying, while 27 percent said they would still buy.
Horizon conducted the survey of 1817 adults in the first two weeks of July, just before the Reserve Bank unveiled its new plans to toughen up the rules for property loans.
It says it questioned "definite buyers" because past research has indicated those people give a better indication of the market trends than people who say they might buy a property.
The survey has a margin of error of 2.3 percent.
Horizon says it is also looking at the potential impacts of any Reserve Bank decision to restrict borrowing in relation to household income.
The survey also found that investors were slightly more in favour of also introducing debt-to-income lending rules in addition to loan-to-value ratios than people who were looking to buy a home to live in. However, a majority of Auckland investors were in favour of only controlling deposits and not implementing debt-to-income ratios.