MEANINGFUL MONETARY POLICY
The Reserve Bank of New Zealand’ s( RBNZ) final Official Cash Rate( OCR) review of the year confirmed a 25 basis point( bps) cut, bringing the OCR to 2.25 per cent after the front-loaded 50bps reduction in October.
The surprise wasn’ t the reduction itself, but the tone.
For the first time this year, the Bank conveyed a notably more confident note – one that surprised markets. Wholesale rates and the New Zealand dollar firmed immediately, reflecting the unexpected hawkish tilt within the Monetary Policy Committee( MPC).
Despite this, the underlying message remained clear: policy settings are now broadly stimulatory, and the easing cycle is considered“ likely complete”.
For homeowners, the practical implications matter most. The effective mortgage rate paid by households is around 100bps lower than last year’ s peak. Fixedterm rates, while volatile, have already begun to settle. And the recent surge in bank switching, boosted by cash-back incentives, is pushing lenders to compete aggressively for quality borrowers.
“ Lower debt servicing costs give buyers confidence, but stable rates give sellers certainty,” says Coulson.“ The dual effect is unusual, and what is driving strong participation on both sides of the transaction.”
MOVING QUIETLY TOWARD
EXPANSION
The latest RBNZ forecasts show property prices rising four per cent next year, supported by improving buyer sentiment and strengthening fundamentals.
Coulson says that sales activity is already tracking close to long-term norms, and the gap between buyer ambition and seller expectation has narrowed meaningfully.
“ Across our Ray White network, the change in sentiment is visible. Open home attendance has lifted. Auction rooms are more competitive. Regional markets are seeing firmer enquiry, and investor participation is climbing as lending constraints ease.
“ The first signs of the upswing are never loud. They’ re behavioural – and what we’ re seeing now is consistent with a market preparing to accelerate.”
At the same time, property ownership costs – from construction materials to insurance – are stabilising.
Rate increases across councils have moderated, and building sector reforms are expected to streamline consenting processes and modernise warranty requirements. While questions remain about insurance appetite, the direction is positive: a system moving from caution to shared responsibility.
“ With servicing costs easing and confidence rising, many households are using refinancing windfalls to pay down annual expenses – or simply free up space in stretched budgets for the holidays. This behaviour typically aligns with upcoming market re-engagement.”
RAY WHITE NOW NEW ZEALAND | 8