The Reserve Bank of New Zealand (RBNZ) has cut the official cash rate by 0.5 basis points, bringing it down to 4.75 percent. This is the second consecutive rate cut, signalling an improvement in economic conditions and a return of inflation to the RBNZ's target range. While official inflation figures will be released next week, early signs indicate that price pressures are beginning to ease.
LJ Hooker Group Head of Network NZ Campbell Dunoon welcomed the move, noting that the reduction in interest rates is already positively impacting the property market.
"With two consecutive rate cuts, we’re seeing a significant uplift in buyer activity and confidence. More people are attending open homes, and there has been a noticeable increase in auction participation across the country," Dunoon said.
Dunoon added that while buyer interest is rising, it has not yet resulted in substantial changes in property prices. According to the latest CoreLogic data, property prices remain relatively stable, with the median house price down by just 0.5 percent in September compared to a year ago.
"This stability suggests that, while more people are ready to make purchasing decisions, the market is still benefitting from balanced conditions that are essential for sustainable growth. The stability in property prices and reduced interest rates create better opportunities for first home buyers wanting to enter the market," he said.
Recent data from realestate.co.nz also points to improving conditions. The number of new property listings has increased month-on-month, and there has been a rise in inquiries from prospective buyers, further highlighting renewed confidence in the market.
"These rate cuts have provided much-needed relief for borrowers, making homeownership more accessible and giving those on the fence the confidence to take action," Dunoon said.
Dunoon noted that lower interest rates could also benefit property developers, helping to add more housing to the market.
"While the property and rental markets are currently stable, changes in economic conditions and a growing population could lead to a shortage of stock. Stats NZ data shows that only 33,632 new homes were consented in the year to the end of August 2024, a 20 percent decrease compared to the previous year," he said.
"With the reduction in the bright-line test, decreasing mortgage rates, and the government's new support programme for residential construction, developers are likely to be more motivated to invest in new builds, helping to grow our housing stock.
"Everyday Kiwis want to live in a place they are proud to call home, and that extends beyond just their front door. As new residential communities are developed, it's essential to create an environment that offers services and a sense of community for those who want to live there.
"Vibrant communities lift our quality of life and make our towns and cities more liveable. Taking steps to improve the quality of our communities also helps attract visitors and tourists, who spend money and support local economies."
With today’s RBNZ decision, Dunoon expects to see improvements to the property market.
"We expect that the combination of improving economic indicators, steady property prices, and lower borrowing costs will continue to provide opportunities for buyers and sellers alike, fostering a positive outlook for the property market as we move into the warmer months."