The Reserve Bank of New Zealand has increased the Official Cash Rate by 0.25 percentage points to 2.50%. While the move will add further pressure to borrowing costs for some households, it's unlikely to change the direction of the housing market overnight. Instead, it reinforces the more measured conditions that have been evident over recent months.
Activity remains steady across the housing market, however buyers are still very price conscious and prepared to wait for the right property. Higher borrowing costs are likely to keep that mindset in place, with buyers continuing to take longer to make decisions, ask more questions and carry out more due diligence before committing.
Across the LJ Hooker network, we're seeing more people through open homes, which is an encouraging sign. Enquiry levels remain healthy, but buyers are comparing more properties and aren't feeling the need to rush. That's leading to more negotiations, greater use of finance and building conditions, and a stronger focus on value. Vendors can still achieve good results, but realistic pricing is becoming increasingly important.
The latest market data tells a similar story. Listing numbers have increased, giving buyers more choice and helping keep price growth relatively subdued. More supply doesn't stop the market from functioning, but it does shift the balance towards buyers. Well-presented homes that are priced appropriately are still attracting solid interest, while properties that are overpriced or compromised on location, layout or presentation are taking longer to sell.
It's also becoming more of a two-speed market. Some regional areas continue to perform well where affordability remains attractive and demand has held up, while many of the larger centres, where stock levels are higher, are seeing softer conditions. That's why national averages only tell part of the story. Increasingly, market performance is being driven suburb by suburb and price point by price point.
Looking ahead, today's increase is likely to reinforce the conditions we're already seeing rather than create a significant shift in the market. Buyers are expected to remain selective and price conscious, while vendors will need to continue meeting the market if they want to achieve a sale. Unless supply tightens or confidence improves more meaningfully, price growth is likely to remain modest over the coming months.
Overall, the housing market continues to move, but buyers remain firmly in control. The additional increase in the OCR is likely to keep a lid on buyer urgency, making realistic pricing, quality presentation and well-informed expectations even more important for vendors.