What’s the RBNZ thinking?

After holding the cash rate steady for the past six meetings the RBNZ, decided to cut rates by 0.25% to 3.25% in June. With steps being taken to reduce the strong price growth in Auckland’s property market and inflation close to zero, the RBNZ felt the time is right to begin its rate cutting cycle.

  • 1 July, 2015
  • Interest rate, RBNZ

Key Indicators

  • Property prices have moved higher.  National average up 5.2% over the year.
  • 7,234 dwellings sold in April 2015, up 27.6% on April 2014.
  • Employment growth remains robust above 3% p.a.
  • Unemployment sits at 5.8% with labour force participation at an all-time high
  • Inflation remains very low with CPI falling 0.3% in Q1 and a 0.1% growth over the year.
  • The NZ dollar fluctuated over the month and now sits at US$0.71 and AUD$0.92

Effect on property markets

The recent decision by the RBNZ will see buyer enquiry levels begin to rise and sets property markets around the country up for a strong winter.  Improving employment markets will also in turn allay job security fears and see demand from investors, first home buyers and up-graders grow.  This combined with a lack of listings will continue to drive property prices higher.

Looking forward

Tighter lending restrictions and a new property tax regime are expected to ease concerns that the RBNZ may have a strong price growth in Auckland.  Paving the way for further interest rate cuts over the second half of 2015 and a strong spring selling period.

The next RBNZ board meeting will be held on 23rd July.

LJ Hooker NZ

Recent Articles

Click here to view our myMarket Reports for the latest property market evaluations