LJ Hooker says the Reserve Bank of New Zealand’s decision to hold the Official Cash Rate at 2.75% offers borrowers some near-term certainty, but is unlikely to trigger a sudden lift in housing demand.
LJ Hooker Head of Research Mathew Tiller said the decision would provide a degree of stability while buyers continued to weigh up mortgage repayments, job security and household budgets.
“Inflation has eased to 3.7%, although it remains above the Bank’s target range. A hold doesn’t necessarily mean rate rises are finished,” Tiller said.
“Today’s decision gives borrowers some certainty for now, but it doesn’t change the underlying conditions in the housing market. Buyers still have plenty of choice and are taking their time.”
REINZ recorded 5,752 sales in September, down 11.6% from a year earlier. Properties took a median of 46 days to sell, three days longer than last September.
Cotality’s latest figures showed national property values were 1.3% lower than a year earlier. Regional conditions remained varied, with Auckland values down 3.2% annually while Christchurch recorded growth of 3.4%.
“Prices are easing rather than falling sharply, and there isn’t one story playing out across the country,” Tiller said.
“Christchurch and Dunedin are holding up better than Auckland and Wellington. Holding the OCR doesn’t change those local differences or immediately shift the balance back towards sellers.”
LJ Hooker Head of Network NZ Allaine Burkett said the pause would give buyers and sellers room to plan, but should not be mistaken for a turning point in the market.
“An unchanged OCR does not guarantee an unchanged mortgage rate, particularly for borrowers coming off an existing fixed term,” Burkett said.
Available stock reached 34,001 properties in September, up 10.7% from a year earlier, while new listings increased just 0.8%. Burkett said those figures highlighted the importance of converting buyer interest into completed sales.
“Buyers have time to compare homes, carry out their due diligence and negotiate. For vendors, today’s hold is not a reason to lift price expectations or overlook feedback,” she said.
“The most effective approach is to price against recent comparable sales, present the property well and work with buyers who are ready to proceed.”
First home buyers accounted for a record 29.5% of purchases in the September quarter, benefiting from lower values and greater choice.
“First home buyers remain an important part of the market. The opportunity is to find a home that meets their needs at a repayment level they can sustain, rather than stretch their budget in anticipation of future rate cuts,” Burkett said.
“For people looking to move up the property ladder, the focus should be on the overall transaction. A lower sale price on their existing home may be balanced by a more favourable purchase price on the next one, depending on the properties and local market.”
Burkett said the upcoming general election on 7 November could keep some buyers and sellers on the sidelines in the short term, despite the OCR hold.
“The property market typically slows ahead of an election, with some buyers and sellers waiting for the result before making a decision. Today’s hold offers some stability on interest rates, but it may not be enough to prompt those people to act before polling day,” she said.
“Once the result is known, some people may feel more comfortable making plans, but that doesn’t guarantee an immediate lift in sales or prices. Affordability, job security and the right property will still guide those decisions.”
Tiller said stronger confidence in employment and the interest rate outlook would be needed before a broader recovery gained traction.
“I see today’s hold as some stability rather than the start of a strong recovery. More confidence around jobs and interest rates would help, but I would expect sales activity to improve before sustained national price growth,” he said.
“People will continue to buy and sell as their circumstances change. Well-presented homes at realistic prices can still attract buyers, but patience and local market knowledge remain important.”