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.”


ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DoC: A Tale Of Two Halves For Rock Wren/Tuke
It’s a tale of two halves for rock wren/tuke with their fortunes hanging on effective predator control, the latest South Island-wide survey shows. The Department of Conservation monitoring programme, now in its third year, tracks populations of this small alpine bird... More>>


TradeMe: Wages Remain Hot While Job Listings Cool Off
Salaries are skyrocketing in the regions as Kiwi employers battle to attract staff and combat the rising cost of living, according to the analysis of over 77,000 vacancies listed on Trade Me Jobs for the quarter ending 30 June (Q2)... More>>



Tegel: Chicken Prices On The Rise But It’s Still The Favourite Protein For Kiwi Families

A combination of domestic and international factors is forcing New Zealand’s largest poultry supplier Tegel to raise its prices from July. The roughly 10% price rise is a result of ongoing cost pressures on the industry, including increases in labour... More>>



Motor Industry Association: New Vehicle Registrations Soften

The Motor Industry Association’s Mark Stockdale says that 12,049 registrations of new vehicles for the month of June shows the market is weakening in the face of raising costs of living... More>>



MYOB: New Data Shows Increase In SMEs Experiencing Stress And Anxiety

The lingering impacts of the COVID-19 pandemic have led to a surge in the number of local SME owners and operators experiencing stress and anxiety, according to new research from business management platform, MYOB... More>>



Carbonz: Cashing In On Carbon: The New Marketplace Helping Native Forest To Thrive

The country’s first voluntary carbon credit marketplace, Carbonz, is here to restore native biodiversity and help Aotearoa reach its carbon zero goals by selling the first carbon credits exclusively from native forest... More>>