Cuts to the official cash rate (OCR) may take time to influence New Zealand’s housing market, according to the Real Estate Institute.
Despite the OCR dropping from 5.5% to 3%, and mortgage rates easing from over 7% to around 4.75%, house prices have not risen. In fact, its August data shows the national median price fell 0.5% year-on-year to $761,000.
"Across New Zealand, confidence in the property market is tempered with caution,” said chief executive Lizzy Ryley.
“Post-OCR shifts, the REINZ data has indicated that it doesn't necessarily give the market an immediate boost. And sometimes I think that it's a couple of months later (before the effect is seen).”
The house price index, which adjusts for variations in the types of properties sold, rose 0.4% compared to a year earlier and 0.3% from the previous month, RNZ reports.
Over the past five years, property prices have grown at an annual rate of 3.2%, lagging behind overall inflation of 4.5%.
In addition, sales volumes fell 3.7% year-on-year and 11.1% from the previous month, totalling 5,866 transactions.
Only six regions saw annual sales growth, with the strongest gains in Waikato, up 13.2% to 688 sales, Gisborne, up 11.1% to 40 sales, and Southland, up 8.1% to 133 sales.
“Properties are taking different lengths of time to sell depending on the area, which shows that while the market is active, buyers are considering their options carefully,” Ryley added.
Furthermore, new property listings rose 9%, bringing the total number of homes for sale to 30,000, a 1.4% increase from 2024.
The national median time to sell fell by two days compared to August 2024, now sitting at 48 days.
Ryley noted that sentiment was cautiously optimistic for the coming months as the effects of lower interest rates continued to spread through the market.
“But it is pretty flat at the moment. We're heading into the usual seasonal factors around spring, so things could shift.
“What we are seeing is some green shoots in the regions, which is really good and of course Auckland's always the bellwether, so I think the next couple of months will be quite interesting,” she stated.
Moreover, she said it was encouraging to see the market settle following the post-Covid surge and the decline in prices that followed.
“House prices need to be quite stable for the market to pick up because obviously we want young people to feel the effects of the OCR and interest rates and start to make movements towards buying again, so it is a good thing really.”