Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


What a lower OCR means for residential housing

Media Release
Date 4.12.2008

What a lower OCR means for residential housing in New Zealand

While the lower OCR is positive news for New Zealand’s property market, it could be some time before the full effects of the decrease flow through to the property sector, according to the managing director of leading real estate company Bayleys, Mike Bayley – especially as more than 80 per cent of New Zealand home mortgages are on fixed terms.

“Interest repayment levels are just one consideration in the decision-making process involved with buying residential property – alongside such other factors as general economic confidence, household debt levels, business forecasts and job security,” Mr Bayley said, following this morning’s 150 base rate point cut by the Reserve Bank.

“Lowering the OCR is certainly the first step in redressing what has been a declining property market in both sales volume and prices throughout 2008, however these other factors, along with raising immigration levels, need to be stabilised before we will see any major correction in property prices. And it could be well into the second quarter of 2009 before those other areas are brought back into line.

“However, a lower cash rate will be the primary stimulus to help redress these factors.

“The news is certainly an early Christmas present for prospective residential property owner-occupiers and comes at a time of increasing personal disposable incomes - with the effects of lower tax rates and lower fuel prices adding more money into household budgets.

“In another dimension to the market, I think residential property investors will be weighing up the undertones of the general economic environment before entering the buying cycle to any large extent, and this may place some constraints on rejuvenating sales activity.

“Potentially accelerating the rebalancing of residential property investment will be the fact that lower interest rates for term deposits and a collapsed share market, will once again make property investment a more attractive long term option. This would be an obvious driver to lift market volumes.”

Mike Bayley said the effects of the Reserve Banks’ 150 base-point slash would only really be felt by the public when mortgage rates were consequently lowered by retail banks – with some of the lower OCR already been factored into current fixed and floating mortgage rates.

“We certainly hope the commercial banks will respond as quickly to a falling OCR as they did when lifting their mortgage rates when the OCR was rising,” Mr Bayley said.

“But don’t expect to see the banks dropping their floating rates immediately by a corresponding 1.5 per cent.”


© Scoop Media

Business Headlines | Sci-Tech Headlines


Reserve Bank: Policy Lessons From A Year Of Covid-19

The Reserve Bank of New Zealand – Te Pūtea Matua was in a sound position to continue to meet its mandate in the face of the COVID-19 induced economic shock. However, we must continue to transform so as to remain relevant and effective in addressing longer-term challenges, Reserve Bank Governor Adrian Orr said... More>>

Transport Industry Association: Feb 2021 New Vehicle Registrations Strongest On Record

Motor Industry Association Chief Executive David Crawford says that the February 2021 figures are the strongest for the month of February ever. Registrations of 12,358 were 8.0% up on February 2020. Year to date the market is up 7.1% (1,735 units) compared to the first two months of 2020... More>>

Paymark: Lockdown Equals Slowdown For Some

The three days of lockdown for Auckland earlier this month made a clear impression on our retail spending figures. While only Auckland moved into Level 3 lockdown, the impact was felt across the country, albeit at different levels. Looking at the ... More>>

Infrastructure Commission: Te Waihanga Releases Report On Water Infrastructure

The New Zealand Infrastructure Commission, Te Waihanga’s latest discussion document highlights the importance of current reforms in the water sector. Its State of Play discussion document about water infrastructure is one of a series looking at the ... More>>

OECD: Annual Inflation Picks Up To 1.5% In January 2021 While Euro Area Records Sharp Increase To 0.9%

Annual inflation in the OECD area picked up to 1.5% in January 2021, compared with 1.2% in December 2020. Following a rebound between December and January, the annual decline in energy prices was less pronounced in January (minus 3.9%) than in December... More>>

Hemp Industries Association: Could The Next Team NZ Boat Be Made Entirely Of Hemp?

With The America’s Cup due to start in a few days’ time, innovators from a very different sphere have been wondering how long it could be before New Zealand could be competing in a boat entirely built from hemp, with the crew eating high-energy, nutritious hemp-infused foods and wearing high-performance hemp kit..? More>>

ACT: Matariki Almost A Half Billion Dollar Tax On Business

“Official advice to the Government says an extra public holiday at Matariki could cost almost $450 million,” ACT Leader David Seymour can reveal. “This is a perfect example of the Prime Minister doing what’s popular versus what’s responsible. ... More>>

Genesis: Assessing 6,000 GWh Of Renewable Generation Options For Development By 2025

Genesis is assessing 6,000 GWh of renewable generation options for development after starting a closed RFP process with 11 partners. Those invited to participate offer a range of technologies as Genesis continues to execute its Future-gen strategy to ... More>>