POLICY SHIFTS AND MARKET SENTIMENT
The Reserve Bank of New Zealand ’ s ( RBNZ ) policy stance has had the most significant impact on recent market sentiment , catalysed by the oversized 50 basis point reduction to the Official Cash Rate ( OCR ) at its October Monetary Policy Review ( MPR ).
“ This reduction to 4.75 per cent has provided welcome relief for borrowers despite requiring time to filter through the economy and materialise in purchasing power . The immediate offshoot is a return to stability and predictability , as buyers and sellers take confidence in a clear understanding of the cost of home ownership .
“ With interest rates stabilising and inflation now contained , Kiwis are feeling more secure about reentering the housing market , reassured that the pricing floor has steadied and the next move for values is undeniably up .”
BEYOND INTEREST RATES
Coulson says that while mortgage lending rates are a factor , they are not the sole driver of residential decision-making , with buyers and sellers more keyed into a dashboard of economic factors .
“ Despite improving mortgage serviceability criteria and bank lending appetites , affordability remains a pressing issue for purchasers , particularly first-home buyers and mortgaged investors , who are often most sensitive to financial changes .
“ Across our network , we ’ ve observed a slight uptick in activity from these groups over the past month , a sign they are cautiously re-entering the market , possibly spurred by the fear of being priced out as property values slowly start to rise .
“ It ’ s early in the cycle , but history tells us that buyers who act early in an upswing tend to benefit the most from the market ’ s inevitable rise , while sellers gain advantages from an ultimate increase in buyer enquiry .”
Supply and demand dynamics , immigration trends , the labour market , and social and lifestyle trends have an important bearing on the current level of real estate activity across the country .
“ Regional variations reported by Ray White ’ s national network of over 100 branches , including areas experiencing employment shifts , remain largely resilient , supported by this increase in buyer confidence , as stabilising inflation and downward trending interest rates improve purchasing power for ordinary Kiwis .”
Source : RBNZ , Westpac .
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