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  • Writer's pictureReal Estate Today - New Zealand

The Reserve Bank of New Zealand’s Decision to Hold the Official Cash Rate at 5.5 Percent

Campbell Dunoon, Head of Network New Zealand at LJ Hooker Group, has shared his insights on the Reserve Bank of New Zealand’s decision to maintain the Official Cash Rate at 5.5 percent. Dunoon highlights the economic factors influencing this decision and its impact on the real estate market.

"Economic indicators continue to remain weak, with low demand impacting both consumers and businesses," Dunoon observed. "Inflation expectations, discretionary spending, and migration are beginning to normalise, which have influenced the Reserve Bank’s decision to hold interest rates."

Dunoon pointed to the latest Reserve Bank survey, which shows a drop in inflation expectations. "The one-year ahead measure has fallen below three percent for the first time since 2021, and the two-year ahead measure is nearing two percent. These trends suggest potential interest rate cuts towards the end of 2024."

Regarding the real estate market, Dunoon noted, "House price growth remains subdued due to high interest rates and an elevated number of listings.

However, prices are 1.3 percent higher than last year, according to the Real Estate Institute of New Zealand. Additionally, the number of sales has started to increase, with April's sales being 25 percent higher than those of April last year."

Dunoon anticipates some mortgage relief later this year. "The average Kiwi struggles with rising living costs, as a significant portion of their income is being consumed by mortgage repayments. This relief will be welcomed by many."

Despite the challenging economic conditions, Dunoon highlighted positive trends within LJ Hooker Group. "LJ Hooker Group (comprising LJ Hooker and Harveys brands) has reported increased activity across its network, with appraisal numbers up 20 percent year-on-year in April and listing volumes 14 percent higher.

This rise in appraisals and listings indicates sustained interest from sellers despite the current economic conditions."


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