Property values are starting their return to normal growth patterns, according to data released by the Real Estate Institute of New Zealand (REINZ).
Average prices rose 1.5% over the three months to the end of October.
This is a welcome turnaround after seeing drops of -0.6% and -0.3% in the previous two quarters to July and April respectively.
For students of the Kiwi property scene, Auckland’s performance is critical in the equation. It’s our bellwether market and its strength signals the overall outlook of New Zealanders.
REINZ has found that values rose 1% for each of the three months in the October quarter – a significant turnaround from the 2.7% drop over the 12-week period to July.
So what’s driving the turnaround?
That’s easy: rate cuts.
The Reserve Bank of New Zealand lowered its official cash rate (OCR) by 50 basis points to 4.75% during its October policy meeting.
And at the end of last month it moved again, this time cutting a further 0.5% off the OCR to bring our interest rate to 4.25%.
It was the third successive cut following significant progress in containing the post-Covid break-out rise in the cost of living. Our inflation rate has eased to 3.3% from 4% – the lowest result since mid-2021.
Media across the world had been speculating that the NZ central bank would become the most aggressive rate-cutter in the world. They predicted our most recent cut would be 0.75%.
While that didn’t happen, our OCR is now lower than Australia’s for the first time since 2013. The Aussie base rate is 4.65%.
Local pundits believe we’ll have a rate at around 3.5% by next year, which will bolster our faltering economy and assist the real estate recovery.
As an experienced agency in your area, we believe the signs are more positive for real estate than for a long time.
If you’re considering selling your home soon, you may profit from an early entry into the market.
Once everyone has worked out that prices are coming back to their former levels, we’ll likely see supply match and even overtake demand – and that’s bad news if you’re looking to maximise the value of your home.