The Reserve Bank today cut the Official Cash Rate by 0.25% to 3.00%, its sixth reduction in this cycle. The move underlines the bank’s intent to support growth, with lower borrowing costs expected to fuel confidence across housing and the broader economy.
LJ Hooker Head of Research Mathew Tiller said the cut reflected a careful balance between easing conditions for borrowers while managing inflation, which continues to be within the target.
“Household spending is proving resilient, with retail sales up 0.8% in the March quarter and card spending holding steady through June,” Tiller said.
“With inflation easing to 2.7% year-on-year, the RBNZ has room to cut rates without reigniting price pressures. This is giving both households and businesses more confidence to plan ahead.”
Listings and sales
The housing market is continuing to strengthen. REINZ reported 30,430 properties for sale in July, down slightly (0.4%) year-on-year and significantly below the March peak of 36,800. Sales surged 20.3% in June and climbed another 4% in July, with seasonally adjusted sales up 4.2%.
“Lower borrowing costs will only accelerate this momentum,” Tiller said.
“Buyers are re-engaging, sellers are seeing stronger competition, and we expect spring to deliver a much more active housing market.”
Rental market
Renters are also seeing a shift. National average rents fell to $636 in June, down 2.7% from $653 a year earlier, according to realestate.co.nz.
“While some regions remain tight, the overall easing is providing welcome relief for tenants,” Tiller said.
“It’s also boosting sentiment among first-home buyers, who can see their savings stretch further.”
Spring outlook
Tiller said the timing of the cut was likely to amplify seasonal momentum.
“This cut will give the recovery an extra push,” he said.
“With borrowing costs falling, inflation easing and sales already surging, activity is set to lift further into spring. Listings are likely to tighten as demand rises, creating stronger competition at auctions and open homes. It is not a boom, but a clear step-up in momentum that will carry into the second half of the year.”
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