More than half of mortgage brokers are reporting that they are approving fewer loans than a year ago, according to a survey by Davy Stockbrokers.
It is also forecasting that the number of new homes built will decline for the first time since 1993.
It expects 82,000 houses will be completed this year compared to 88,200 last year.
The firm says house prices are static. Six interest rate rises since December 2005 are making it harder for young people to get on the property ladder.
It says a couple who in the past were marginal as to whether they would get a loan now need 5% more disposable income.
As first-time buyers find it harder, rents have risen 7% in the last year. In 2001 the number of new homes bought by first time buyers was 63%; now that figure is 33%.
A fall in new houses being built would have an economic side effect. Every drop of 10,000 in the number of completions will slice 1% off growth.
