New Zealand property buyers enjoyed more good news with another cut in the Official Cash Rate (OCR).
The Reserve Bank of New Zealand took the knife to the OCR for a fifth time since last August, reducing the rate 0.25% to 3.5%.
Determined to spark up emerging economic growth and support the five-month momentum of the property market, our central bank said it made the cut because inflation remained within its target band of 1%-3%.
A combination of recent exchange rate declines and higher export earnings were expected to support growth.
As any property enthusiast knows, confidence in real estate is underpinned by the prevailing view of the Kiwi economy, plus personal job security.
A reduced OCR has allowed lenders to offer more attractive fixed-term interest rates, and that seems to have caught many buyers’ attention.
Some 20% of new loans in February were on fixed rates of 12 months or more.
It’s logical to assume we’re near the end of the cutting cycle as most Reserve Banks in the developed world have warned against the expectation of a return to the near-zero rates offered during Covid.
They were unusual days, as recent analysis by the OneRoof portal has revealed.
It found house prices have jumped by more than $250,000 in over 200 suburbs since Covid began in early 2020.
Two markets have seen average prices rise more than $1m – Arrowtown ($1.228m) and Lake Hayes ($1.016m).
Increases of more than $500,000 have been recorded in 27 suburbs. Some of the steepest value climbs have been in Omaha ($994,000), Point Wells ($861,000); and Waiheke Island ($805,000), according to OneRoof.
While today’s market is nowhere near that performance, it is returning to a healthy state.
The number of successful property sales in the March quarter increased 3.4% on last year’s numbers, and the average value rose 0.4%.
A residential property is now worth an average $970,000.
And with Otago joining the club, there are now five regions in New Zealand with average values sitting at more than $1 million.
Auckland heads the list with $1.4 million. The area of Queenstown-Lakes, which sits inside Otago, is recording average deals of $2.07m.