The property market is awake. Now what?

17/10/2019

Spring has sprung, and the property market is awake again. Does this mean OCR cuts are no longer on the way?

REINZ’s latest property market report, published on 15 October, shows that median house prices increased by 6.6 per cent in September, hitting a record high of $597,000 ($500,000 excluding Auckland). And as REINZ chief executive, Bindi Norwell pointed out, there might be more to it than just the usual Spring bounce: “Median prices are lifting as a result of a number of influences such as the OCR drop back in August, which is slowly injecting more confidence into the market, and the continued lack of supply across many parts of the country.” 

Will the Reserve Bank take notice?

According to Westpac economists, better-than-expected inflation data and rising property prices may give the Reserve Bank ‘pause for thought’ – meaning further OCR cuts are not a done deal. Weak business confidence “adds to the likelihood of another OCR cut at the November Policy Statement,” said Westpac chief economic, Dominick Stephens. “The balance is probably in favour of a cut, but our view is there will not be another one in 2020 because of further growth in the housing market.”

Never a dull moment, as some would put it.