A construction finance squeeze as banks and non-bank lenders lower their tolerance for risk in residential development could sink many new apartment projects, reduce supply and worsen the housing affordability crisis, a new real estate debt market report has found.

More than half of the 100-plus lenders surveyed by commercial mortgage originator Stamford Capital – 57 per cent, up from 45 per cent last year – now require developers to sell at least 60 per cent of apartments off the plan to qualify for funding.