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 this year, providing some relief to mortgage holders.
While the cut was no surprise, Ray White New Zealand CEO Daniel Coulson has welcomed it, saying it was good news for the housing market.
“The announcement today by the RBNZ was widely expected by almost everyone, both in the sector and the general public,” Mr Coulson said.
“If anything, a number of people would be surprised the reserve bank didn’t go further with a 75 basis point cut.
“It appears they are trying to balance a struggling economy with a strengthening housing market.
“That being said, it is news that will be warmly welcomed by mortgage holders, prospective homeowners and small business owners across the country.”
Mr Coulson said the shift was so widely expected that many had begun acting on their real estate plans in January.
“Nationally, across the Ray White group, we have seen a 26.8 per cent lift in sales compared with twelve months ago,” he said.
“We also saw unprecedented demand from homeowners looking to capitalise on a recovering housing market, with a January record of 1,955 listings – this represented an increase of 31.7 per cent on last January.
“Auction clearance rates have also been on the up, with January clearance rates at 57.1 per cent and an average of 3.7 bidders per property that Ray White offered for sale by auction.
“While there are many that expect conditions in the real estate market to continue to improve over the coming year, we are still some way off the frenzy experienced during the last market peak.”
Ray White Group chief economist Nerida Conisbee said, while the rate cut was good news, New Zealand’s economy was still facing challenges.
“With unemployment hitting a four year high at the end of 2024, it is looking like last year’s cuts may not yet be having the desired effect of kick-starting the nation’s economy,” Ms Conisbee said.
“The unemployment rate is hitting young people the most with youth unemployment (15-19 years) now sitting at 23 per cent. Overall, the economy shed 32,000 jobs last year
“The New Zealand economy is in recession and employment is only part of the problem. The economic contraction last year was the worst seen since 1991, excluding COVID lockdowns.
“As a result of this poor economic data, the RBNZ has again cut rates this month. It is expected that rate cuts will continue to hit at least 3.25 per cent by mid this year
“While the economy continues to be challenging, this cut will be good news for many New Zealanders hip pockets with mortgage rates continuing to come down.”
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