The collapse of property projects in Auckland is "almost groundhog day" to the run-up of the global financial crisis, says a KPMG expert.

The most recent development to be cancelled is the Flo apartment project in Avondale, with buyers’ 10 per cent deposits refunded this week and the developer citing funding issues and construction costs.

John Kensington, the author of KPMG’s Financial Institutions Performance Survey said there are similarities to what was happening at the start of the GFC.

“Banks were looking at property development opportunities back then, and going, ‘we’ve got a record rise in prices, we’ve got shortages of materials, we’ve got shortages of labour, we don’t think this property development has been correctly analysed, we don’t think it’s going to work’, so they declined to fund it.,” he said.

The current scenario was different because the finance companies were diminished and no longer in a position to take up the slack.

“The money went to finance companies [before the GFC], who having got the money had to find a home, and probably invested in the very things the banks had said no to. At least this time round there is not as strong a property finance company sector there to take up the slack when the banks said no. I’m sure if there was, they would happily bank some of this.”

He added that there was currently a “real strain on the construction industry, labour costs are blowing out, and there are some shortages of building materials”.

The KPMG report for the three months to the end of June 2016 showed total lending rose by 2.2 per cent or $8.08 billion in the quarter, the second-fastest quarterly growth in the last five years.

This was mainly driven by lending to investors, with a 39 per cent increase in new lending to property investors. Lending to first-home buyers increased by 31 per cent while lending to owner-occupiers was up 24 per cent.

“What you are seeing is the appetite for New Zealanders to borrow, the desire to borrow has not slowed down, in fact, it’s running at a peak. At the same time, as that is happening, the desire from New Zealanders to receive to a low-interest rate on their deposit has run out.” Mr Kensington said.

He said the money was being withdrawn from term accounts as they mature and is being invested in homes, extensions, baches and the stock market.

The report covers a period prior to the adoption of new Reserve Bank restrictions on property market lending which requires investors to have a deposit of 40 percent. These were announced in July and almost immediately adopted by the major lenders, but formally came into force at the start of this month.