The latest Official Cash Rate (OCR) announcement on July 9 kept the rate at 3.25%. The Reserve Bank of New Zealand (RBNZ) pressed pause and maintained the OCR after six consecutive cuts that started back in August 2024.
Leading into the latest OCR decision, economists speculated that the rate could have either held or dropped further. The monetary commentary accompanying the previous OCR review on May 28 indicated that there could be one or two more cuts still to come this year, so perhaps the RBNZ is letting the dust settle.
However, I don’t expect this hiatus to last. Economic data from the last quarter shows the economy flagging on several fronts; retail spending down, rise in unemployment, lower than predicted rises in house prices and migration, and an increase in food prices.
Property market insights
But it’s not all doom and gloom, June property market data shows interesting insights:
The recent decline in building consents for new properties has halted, plus there has been steady auction activity with Canterbury having its biggest increase since Feb 2024.
While recent Quotable Value (QV) data shows a drop in values in Auckland (-1%) and Wellington (-2%) the regions have been holding their own with Tauranga up 1%, Hamilton City up 0.5% and Queenstown Lakes District 1.9%.
Why does the OCR matter so much?
The government has charged the RBNZ with keeping inflation within the target range of 1% to 3% to maintain price stability.
Adjusting the OCR affects interest rates. Lower interest rates support economic activity which could create more jobs over time, while increasing the OCR increases interest rates and helps bring inflation down. In the past, changing the OCR has been used to slow certain areas of the economy such as the property market.
At Southern Cross Partners we offer first mortgage investments secured with New Zealand property, with rates starting from 6.75%. Keeping informed of economic developments assists us with lending on the right properties, in the right location at the right level.
Find out more about us at southerncrosspartners.co.nz, call 0800 00 58 43.
Disclaimer: Southern Cross Partners is licensed to provide peer to peer lending services under the Financial Markets Conduct Act 2013. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser before making any investment decisions.