Ray White Now New Zealand - September Edition - Page 6
DISRUPTIVE AND UNCERTAIN TIMES OWNER OCCUPIERS BECOME MORE ACTIVE
“ There is an air of expectation in the current market . We have run-off campaigns that are stronger than ever . Buyer demand is very high , and enquiry rates have hit a new high as well . We are encouraging sellers to list now and be ready to launch on the change of levels because the buyers are already waiting .” Daniel Horrobin , Ray White City Realty Group Director with offices in Auckland Central City , Wynyard Quarter , Eden Terrace , Parnell and Sandringham .
The immediate announcement by the government to move back to COVID Alert Level 4 saw the Reserve Bank delay an increase in the Official Cash Rate . This expected rise was delayed because of the restrictions now on the New Zealand economy and the potential uncertainty around inflation and employment depending on how long the country is under Level 4 conditions .
The Reserve Bank has indicated that house prices that have increased over 25 per cent in the last 12 months are unsustainable . It is a widely held view that while there is uncertainty right now , interest rates are likely to rise 0.50 per cent at the next Reserve Bank announcement in early October . The Reserve Bank has projected the official cash interest rate will lift to 2 per cent by mid-2023 . That is 1.7 per cent higher than the current rate .
While the immediate position assumes that we will be in a short lockdown , this is unpredictable , and the field sales activity and price growth will be unsure . Currently , inflation is at 3.3 per cent , higher than the range for the Reserve Bank and the property market . The medium-term outlook will see mortgage rates rise , which mean borrowers will have increased payments . While equity buildup has been significant , either way , the Reserve Bank , wishing to have some headwind against rising prices , will provide regulatory change to continue tightening loan to value ratio as well as the phasing in of the removal of interestrate deductibility for investors .