The Reserve Bank of NZ delivered another 0.5% increase in the official cash rate (OCR), taking it to 3.5% – the highest level since June 2015 when they lowered it from 3.5% to 3.25%. In terms of mortgage rate implications floating loans may see increases but there might not necessarily be much change in fixed rates as a direct result of this increase.
From a borrower’s perspective, clearly the increases in mortgage rates over the past year or so have produced considerable challenges, let alone any further rises in the coming period. With low unemployment helping households adjust to the ‘new norm’ for their repayments without widespread problems.
What this all means for the property market is that the falls in home values aren’t about to come to a sudden halt. But at the same time, there are some signs that certain buyer groups – e.g. first home buyers – are becoming a little more comfortable to return to the market, perhaps aware they won’t necessarily be able to buy perfectly at the floor but that the falls already seen are ‘good enough’ for them. A bit of extra demand, in turn, sets the scene for property values to potentially stop falling in the first half of next year, provided that unemployment stays low.
Overall, in September buyers remained cautious, with sales numbers up 6.2 percent on those for August but down 7.8 percent on those for September last year.
The median price for Auckland for the month at $1,064,000 fell away by 4.2 percent on that for August and was the lowest it has been in any month for 16 months. However, the average sales price at $1,164,852 was up 0.6 percent on that for August, and 2.9 percent ahead of the average price in September last year.
While the median price in September is down 14 percent on the median peak price of $1,240,000, achieved in November last year, the median price in September is down only 3.3 percent on the median price in September last year. This can be seen in the sales figures which I have detailed below.