Where to from here
With a super-sized cut to the Official Cash Rate, the Reserve Bank of New Zealand has fired the starting gun on New Zealand’ s next housing cycle, but where will this newfound confidence take us in the months ahead?
This October, the Reserve Bank of New Zealand( RBNZ) surprised markets with a bolder-thanexpected half per cent cut to the Official Cash Rate( OCR), taking it to 2.50 per cent, and the message was unmistakable: the time for cautious fine-tuning is over.
“ The Committee remains open to further reductions in the OCR as required for inflation to settle sustainably near the two per cent target mid-point in the medium-term,” the Monetary Policy Committee noted in its statement. For economists, it was a signal that the central bank is prepared to do more, and for homeowners and investors, it marked a definitive turn in the property cycle.
Economists have widely branded the move more‘ doveish’ than expected( showing a willingness to support growth through lower interest rates), with many anticipating another 25 basis point cut later this year if the economic recovery stalls.
MOMENTUM RETURNS TO THE MARKET
Already, the effects are being felt. According to online marketplace Trade Me’ s Property Pulse Report, buyer demand in Auckland is up 12 per cent year-on-year, outpacing a six per cent lift in listings.
Nationally, the average asking price rose 1.30 per cent to $ 835,350, while Auckland’ s average property price has climbed back above $ 1 million, the strongest monthly rise since January.
After two subdued years, it seems confidence is returning. Trade Me says property listings jumped 19 per cent in September, while buyer searches surged 24 per cent – a clear signal of renewed engagement.
Kelvin Davidson, chief property economist at property data and analytics firm Cotality, calls it a‘ happy situation’- where both first-home buyers and investors are becoming more active.
Cotality’ s Buyer Classification Data shows first-home buyers currently account for around 27.50 per cent of the market’ s purchases, while investors have lifted their market share to 24.60 per cent – up from the low of 22 per cent recorded in the two years to 2024.
“ In general, there’ s a bit for everybody at the moment,” Davidson says.“ Cashflow has turned around a lot in the past year, interest deductibility is back to 100 per cent, and lower rates are reducing the amount investors need to top up.”
For many, those top-up mortgage repayments have halved since last year – from around $ 400- $ 500 / week to closer to $ 200. Analysts say that represents a sizeable shift, motivating investors to re-engage with the market.
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