Chief Property Economist Kelvin Davidson unpacks the latest OCR decision and what it means for the housing market.
Today’s decision by the Reserve Bank of New Zealand (RBNZ) to leave the official cash rate (OCR) unchanged at 5.5% was no surprise, given the incoming flow of economic data released since their last decision in late February hasn’t emphatically moved in either direction.
In particular, most inflation measures are generally trending lower, but they remain ‘too high’, and the pace of decline in price pressures is quite slow too. Certainly, that general picture was the key theme of the Reserve Bank’s short commentary which was published alongside today’s decision. All eyes will now turn to the next consumer price inflation data release, covering the first quarter of 2024, due on April 17.
In terms of housing market implications, today’s decision is neither here nor there, with both transactions activity and property values likely to continue to rise, but at slow rates – a pattern we’ve already been seeing for the early part of 2024.
After all, although general confidence levels across the housing market have risen compared to where they were six to nine months ago, there are still significant restraints, including stretched affordability and high mortgage rates. The recent strong rise in listings activity is also giving buyers a lot more choice, which naturally tends to see price pressures dissipate a bit.
Overall, interest rates look likely to stay fairly high for most of 2024, posing problems for new buyers and also for existing households facing the end of their current (lower) fixed mortgage rate agreement. We might have to wait until the next OCR decision on May 22 for further guidance/hints about when the first cut might be seen.
Meet Kelvin Davidson
Chief Economist
Kelvin joined CoreLogic in March 2018 as Senior Research Analyst, before moving into his current role of Chief Economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.
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