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Reserve Bank drops official cash rate 50 basis points to 4.75%, lowering borrower costs

October 9, 2024

In a widely anticipated move, the Reserve Bank of New Zealand (RBNZ) has cut its official cash rate by a chunky 50 basis points (0.5%) to 4.75%, the lowest level in 18 months.

The central bank started the easing cycle in August with a 25 basis point cut, which was quickly passed on to borrowers by retail banks and non-bank lenders.

In its statement, the RBNZ’s Monetary Policy Committee said that as annual consumer price inflation was within its 1% to 3% inflation target range and was converging on the 2 percent midpoint, a 50 basis point drop was appropriate. The size and speed of future cuts would be determined by the state of the economy, it said.

The latest move has been welcomed by economists who have said the subdued economy and stretched homeowners needed urgent rate relief.

Ian Keightley, Head of Operations, Raine & Horne New Zealand said the cut opened wider a window of opportunity for buyers looking to move into the property market.

“Conditions are verging on ideal. Borrowing costs will now fall further, buyers have increased choice with spring stock levels the highest they have been in a decade according to realestate.co.nz data, and continuing price stability offers certainty for buyers and sellers who move quickly.

“However, this window of opportunity may start to narrow as the market reacts and may soon move into a new phase of the cycle. My advice is to seize the moment before the ground starts shifting, if you can find a well located property that meets your needs,” Keightley said. 

The latest New Zealand Property Report by realestate.co.nz showed that nationally September housing stock levels exceeded 30,000, the highest level since 2014, with more than 6,000 more properties available for sale last month compared to September 2023. 

All regions experienced double-digit available housing stock growth last month, except for Nelson and Bays which increased 8.3% and the West Coast which was up 9.7%. 

Realestate.co.nz also reported new listings jumped in September, surging 18.7% year-on-year and 15.3% month-on-month nationally. This was highest level of September new listings in three years, indicating sellers were increasing in confidence. 

The regions with the most significant year-on-year increases included Gisborne (50.0%), Coromandel (40.2%), Central Otago/Lakes District (40.9%), Wellington (36.1%), Otago (34.1%), and Central North Island (32.5%). 

 

Whether you want to rent, let, sell or buy a property, don’t hesitate to contact your local Raine & Horne office.