What's the RBNZ thinking?

After cutting rates last month the RBNZ, decided to reduce interest rates by another 0.25 basis points to 3.00%. Ongoing concerns over falling dairy prices, global economic volatility and an overvalued dollar have all combined to ensure a second consecutive rate cut.

  • 1 August, 2015
  • Interest rate, RBNZ

Key Indicators

  •  The national median property price has risen 5.4% over the year to June.
  • 7,426 dwellings sold in June 2015, up 29.2% on June 2014.
  • Auckland’s median price has increased 26% since June 2014.
  • Inflation remains low with CPI falling 0.4% in Q2 and up 0.3% over the year to June.
  • The NZ dollar softened over the past month to US$0.65 and AUD$0.88.
  • Unemployment sits at 5.8% with labour force participation at an all-time high.

Effect on property markets

This decision, combined with last month’s rate cut, is expected to further boost buyer demand across the country’s property markets.  Price growth is expected to continue, especially in Auckland, as the uplift in buyer demand comes at a time when listings remain low.  The softening NZ dollar will also make purchasing property here more attractive to offshore buyers, especially given the recent volatility in the Chinese economy.

Looking forward

The tighter lending restrictions and a new property tax regime, to be introduced in October, combined with low inflation and falling commodity prices should provide the RBNZ with additional room to cut interest rates further over the second half of 2015.

The next RBNZ OCR meeting will be held on 10th September.

LJ Hooker NZ

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