Reserve Bank drops Official Cash Rate to 4.25% from 4.75% (Source)
As widely expected, the Reserve Bank cut the Official Cash Rate, but surprised the markets with a relatively 'hawkish' view of any future reductions in the OCR.
Wednesday’s OCR announcement saw the RBNZ cut the Official Cash Rate (OCR) to 4.25%, down from 4.75%.
It means the RBNZ has now trimmed the OCR by 125 basis points since August, taking it down from the peak level of 5.50% it was at for over a year
In the newly published Monetary Policy Statement, The RBNZ latest forecasts suggest that the next cut in February may be just a 25 basis point cut, while the OCR is forecast to be around 3.5% by the end of next year.
Our view: Last week, we noted that even after the most recent rate cut, the Reserve Bank would still have more work to do, and that remains the case. What's particularly interesting is the noticeable shift in sentiment that accompanies each OCR announcement and every reduction in bank interest rates. We may see a resurgence of activity in the property market in the new year, following a well-deserved break over the holiday season.
Property Investment: The rule change that's likely to hit NZ property investors harder (Source)
As interest rates fall further over the year ahead, debt-to-income (DTI) rules are likely to hit investors harder than first home buyers.
When the debt-to-income rules came into play in July, high interest rates were more of a brake on borrowing. But that could change as rates ease.
An economist with property analytics company Corelogic says, it’s a significant change for the property market, as it’s usually investors who borrow at higher DTIs.
Our view: DTI will slow some demand. However overall, we think the lowering interest rates will allow demand to lift significantly, thus starting to put pressure on prices.
New Zealanders are feeling more confident about housing - ASB (Source)
While New Zealanders are feeling more positive about the housing market, they aren't expecting a fast recovery, ASB's latest Housing Confidence Survey reveals. It indicated 24% of respondents expected gains compared with 13% last quarter and a net 20% of respondents believe it’s now a good time to buy (up from 8% last quarter.) Aucklanders, who had previously been more pessimistic, along with South Islanders, became the most optimistic in the country, with both regions seeing a net 29% of respondents expecting house price increases.
Outlook for housing in 2025...do we really want another boom? (Source)
In this column, the Herald’s business editor at large Liam Dann explores the outlook for the housing market, unpacking the latest market data and the pros and cons if the market starts booming again.
After years in the doldrums, is the market about to take off?
Our view: We mentioned last week that the noose that held many people back has been released to a certain extent which should see a lot of this renewed confidence filter back into property markets in the new year.
New home builds in Auckland continue to slowly decline (Source)
The number of new homes being built in Auckland is still on a slow decline.
Auckland Council’s latest data reveals new dwelling completions peaked over September-November last year (when 5801 Code Compliance Certificates were issued, which is more than 1900/month).
Since, the numbers have been in decline.
Our view: This simple statistic brings forth a simple comparison, supply vs. demand. It will be interesting to observe how these levels change over the next 12 months and how this contributes to the resurgence of the property market in 2025.
Housing Minister wants CHPs to have 'competitive neutrality' with Kainga Ora (Source)
Minister of Housing Chris Bishop says his ambition for New Zealand’s social housing system is to create a level playing field between community housing providers (CHPs) and Kāinga Ora.
“I don't care who builds social houses as long as they are built,” Chris Bishop said during a speech at Auckland’s Community Housing Aotearoa Conference on Tuesday.
“I am agnostic as to whether those houses are delivered by CHPs or the Government. The simple truth is this, we will not solve our housing crisis by the Government alone.”
New funding agency to 'supercharge' CHPs (Source)
A new Community Housing Funding Agency was launched on Monday, to supercharge the delivery of community housing by unlocking cheaper finance at scale. It will be managed by non-profit organization Consumer Finance, which has issued more than $160 million of bonds to community housing providers (CHPs) since it was set up in 2019.
Have a great weekend!
From the team at Erskine Owen.
