This afternoon the Reserve Bank is due to reveal whether the official cash rate [OCR] is taking another hike or staying where it currently sits at 5.5 per cent.
The general feeling among local experts – which matches the predictions of national economists – is that the OCR won’t go any higher.
Property Brokers regional director for Wairarapa John Arends believes the OCR will stay where it is.
“I don’t think they’ll raise it again,” he said.
“The Reserve Bank has been raising the OCR to cool the housing market, and that has had the desired effect, with property values even coming back from early 2022 values.”
Due to Wairarapa’s close relationship with Wellington’s housing market, local markets had seen a heavy impact, Arends noted.
“There’s a lot of influence in our market of the Wellington buyers moving here and vice versa.
“But I think we’ve taken the brunt of the hit.”
CoreLogic NZ’s house pricing index for June 2023 showed Masterton’s average property value sitting at $553,434.
Further up the ladder, the average house value in Carterton was $630,469, while in South Wairarapa, it was $796,463.
Nationally, June saw an movement downward of the monthly rate of decline to 1.2 per cent, compared to May’s 0.7 per cent.
CoreLogic NZ Head of Research Nick Goodall said this might be a “speed bump” for expectations that the housing downturn may have already ended.
“The acceleration in falls illustrates the impact of a long and strong hiking cycle, as stretched mortgage affordability continues to constrain demand,” Goodall said.
Meanwhile, Bayleys’ Andrew Smith said he is observing people downsizing as a result of higher interest rates driving up mortgage payments.
“We’re starting to see some people look to trade down the quality of their property,” he said.
“Perhaps they don’t need to live in a $1.6 million home and can live in a $900k home.”
Increased mortgagee sales indicate many are selling under financial constraints rather than “just wanting to sell”.
Smith agreed with Arends that another OCR increase is unlikely.
“Because they just can’t afford to do that.”
