New data from property media company OneRoof provides a stark view of the current housing market in New Zealand as pressure continues to build on the Reserve Bank (RBNZ) to drop interest rates.
In the past month, it has kept the Official Cash Rate (OCR) at 5.5% – significantly higher than Australia’s (4.56%) and Canada’s (4.5%).
The Canadians have already seen two rate cuts this year with more expected. Meanwhile, the European Central Bank, Sweden and Switzerland have cut their rates, too. The United States is expected to move in a matter of weeks.
The RBNZ has been hardline in its fight to reduce inflation after a post-Covid spike.
It wants inflation to drop into its desired 1-3% range. For the first quarter of this year, it was 4%.
The bank’s explanation for holding the OCR at 5.5% held out hope for cuts soon. It signalled the toughest inflationary period was over, and it did not want the country to slip into a deep recession.
A Reuters survey found 22 of 32 economists predicting rates to fall to 5.25% and lower by the end of the year.
The latest property data from the OneRoof-Valocity House Value Index underlines the need for action.
It found average property values in more than 500 suburbs fell in the second quarter. Most were in the bellwether market of Auckland, where average prices were down 2.1% for Q2.
Wealthy areas across NZ have been hit hard, including the South Island’s Queenstown-Lakes District, where the average price dropped $122,000 to $2.717m in Q2.
The average national property value was down 0.9% to $969,000.
Not surprisingly, first-home buyers remain the largest vendor segment.
Owners looking to sell might consider the fact that while they may not achieve their anticipated price in today’s market, they’ll likely enjoy a solid discount when they buy.
Below, are three quick tips for buyers:
Be Ready: Ensure you have a pre-approved mortgage so you understand your budget and can move quickly when you find the right property.
Think Long-Term: Focus on finding a property that aligns with your long-term goals and financial situation. Resist a purchase because you think it’s cheap. If you’re buying your primary residence, the satisfaction of striking a bargain will soon give way to buyer remorse.
Motivated Sellers: Many owners will hold out for their desired price, even in a tough market. So, seek out motivated sellers willing to strike a deal quickly. Don’t hesitate to negotiate as these sellers are usually more willing to compromise in a slow market.