Homeowners struggling with climbing interest rates will be relieved to know the latest increase of the Official Cash Rate [OCR] from 5.25 per cent to 5.5 per cent is likely to be the end.
The Reserve Bank [RBNZ] has indicated the latest hike is the peak and will be enough to drive down national inflation.
The latest CoreLogic House Price Index said that nationally, average property values are 10.2 per cent lower than the same month last year.
However, values still remain at an average $121,000 higher than pre-covid levels [March 2020].
The decrease in property value observed nationally has also been reflected in Wairarapa real estate.
According to the latest CoreLogic report, Carterton saw a significant drop in average value over the last three months of 6.7 per cent to $621,699.
South Wairarapa had an even bigger plunge of 7.5 per cent, with average property value dropping to $802,215.
However, Masterton in comparison, barely saw a change, with a decrease of 1.1 per cent to $571,000.
CoreLogic NZ Head of Research Nick Goodall said indicators such as house price falls and the latest RBNZ forecasts for the OCR were good signs for homeowners.
“This expected ceiling for interest rates reinforces our view that a possible floor in prices is approaching,” said Goodall.
Goodall said this peak in the cash rate would help provide certainty to borrowers who would be impacted by higher interest rates.
“Mortgage holders and aspiring home owners should now be able to quantify the worst-case scenario for their mortgage repayments,” said Goodall.
“Giving both them and their bank confidence in assessing serviceability test rates.”
Goodall said more vulnerable sectors to the OCR hikes would be first-home buyers who hadn’t had time to accrue equity, along with lower-income households.
Wairarapa Property Investors Association president Tim Horsbrugh said he expected people would still be feeling the pinch for the rest of the year.
“Everything looking to the future says interest rates are likely to come down, probably at the end of the year and early next year,” he said.
“I think there’s going to be quite a lot of people hanging on to the results of the election, especially in the housing market.”
Looking at the bigger picture, Horsbrugh said he supported the view of RBNZ, and was pleased inflation was on the way down.
“There’s a lot of external things at play, and there’s been a big change in the global supply distribution,” said Horsbrugh.
“That’s going to have quite a big impact on deflation.”
