Rate cut welcome news for property market

The Reserve Bank of New Zealand has announced a 0.5 per cent rate cut, which is set to instil further confidence in the property market as we head into 2025.

Ray White chief economist Nerida Conisbee said this third cut was good news for the real estate sector and the broader economy.

“Following the previous two cuts, this third 50-basis-point reduction demonstrates the Reserve Bank’s strong commitment to reaching their target rate quickly,” Ms Conisbee said.

“Three consecutive cuts, now totaling 125 basis points, marks a significant shift in monetary policy that will substantially impact borrowing costs.

“The RBNZ is clearly confident in the inflation outlook to maintain this pace of cuts.

“This latest cut should accelerate the property market recovery we’ve been seeing since August. With lending rates now materially lower than six months ago, we expect to see a strong finish to 2024 in terms of transaction volumes.”

Ray White New Zealand chief executive Daniel Coulson said today’s announcement by the Reserve Bank of New Zealand would be welcome news to both prospective homebuyers and mortgage holders.

“While it was widely expected that today’s review would see another decrease in the OCR, and a number of banks have pre-emptively started to reduce mortgage rates, the move does give even further confidence about the direction of travel for mortgage rates and the medium term lending environment,” Mr Coulson said.

“Since the last OCR review our group has seen a significant lift and activity across the residential market. Both from prospective buyers as well as homeowners who are seeking to take advantage of renewed energy in the housing market.

“Following the last OCR review, Ray White saw a 30.2 per cent increase in sales for the month of October when compared with 2023.

“It is also widely expected that there will be a high volume of new listings entering the market in early 2025. This will bring both choice to prospective purchasers as well as competition for would-be sellers.

“Many will reflect upon the same high level of listing that emerged in early 2023 which saw the supply/demand dynamic tip in favour of the buyer. The difference as we approach the holiday period this year, and it is a big difference, is the cost of borrowing.

“The move will also be welcome news for many small business owners in New Zealand whose business lending is often tied to the residential mortgage.”