Check out JB's latest NZ property market update below, or scroll down to read the full article:
November’s shaping up to be a big month—so here’s the latest on what’s been happening with interest rates, the housing market, economy, and around the world over the last few weeks.
First up, all eyes have been on the US Presidential elections this week
Despite predictions of an extremely tight race, Trump has pulled off a convincing win over Kamala Harris, sealing his second stint in the Whitehouse from early 2025.
At the time of writing, Republicans have secured control of the Senate and look set to retain control of the House, all of which means Trump is going to be a fairly powerful president.
The implications of that, both for the US and the rest of the world, remain to be seen—but to me, the thought of a hothead at the helm (and one with essentially unchecked power) carries some risk. The most obvious risk for New Zealand being tariffs on our exports, or recession risk with major trading partners like China.
Needless to say, the next few months, and years, are going to be an interesting watch.
A little closer to home, we’ve got our final Official Cash Rate (OCR) announcement of the year on the 27th November
Most of the market is still picking a 0.50% decrease as the most likely outcome, which would take the OCR from its current 4.75% down to 4.25% heading into Christmas.
The best advertised one-year rate currently available is 5.79%, although there’s been plenty of room for negotiation on that in recent weeks—with some lenders willing to offer as low as 5.59%.
If things play out as expected later this month, advertised rates should fall to around the same level as those negotiated rates, settling somewhere between 5.29% and 5.49%.
The Reserve Bank will also deliver its updated interest rate forecast at this next OCR announcement.
If it signals that we’re in for a series of aggressive OCR cuts over the first half of 2025—to get us back to neutral sometime mid-next year—that should see longer-term wholesale rates start to fall pretty swiftly.
Between that, and signs of life starting to return to the housing market—which should help to drive more competition among the banks—there’s a distinct possibility that three-year fixed rates could (finally) drop below 5.00% by year end. My pick would be 4.89%.
So, what’s been happening in the NZ property market in recent weeks?
Activity has picked up after October’s OCR cut, but the effect has been limited.
High-income borrowers have started to reengage, which is driving more demand for well-presented properties in desirable locations. There are still pockets of weakness out there, though, where vendors are having to lower their price expectations to meet the market.
I’m picking a slow and steady recovery over the next few years, with a few ups and downs.
Falling interest rates mean there’s finally some light at the end of the tunnel, but it’s going to take a while for the economy to bounce back
We might have a little more cash in our back pockets, but the key focus for many over the next while is going to be on debt reduction and rebuilding their balance sheets. People aren’t going to rush out and make big purchases until they feel like they’re back on a solid financial footing.
That means the outlook for businesses still isn’t great. Hospitality and local tourism will hopefully get some reprieve as we head into the summer holidays.
With the latest unemployment figures out this week (still tracking upwards) people aren’t feeling as secure in their jobs. And only once those unemployment stats peak, likely towards the middle of next year, will we start to see any meaningful recovery in business confidence.
Of course, there’s all the global uncertainty we’re seeing at the moment (including in the wake of the US elections) which will also have an impact.
Things should start to feel more positive—not hard when you’re coming off such a low base—but we’re not heading for the next boom any time soon.