Interest rates expected to remain high in 2024
Kelvin Davidson (pictured above), chief property economist at CoreLogic, has provided insights into the Reserve Bank’s (RBNZ) latest decision to maintain the OCR and its implications for the housing market.
RBNZ holds OCR steady
RBNZ’s decision to keep the OCR at 5.5% aligns with expectations, given the recent economic data hasn’t shown significant shifts.
“Most inflation measures are generally trending lower, but they remain ‘too high’, and the pace of decline in price pressures is quite slow too,” Davidson said, emphasising the cautious stance taken by the RBNZ reflected in its brief commentary.
Impact on the housing market
With the OCR remaining unchanged, the housing market’s trajectory is expected to continue its current path.
“Transactions activity and property values are likely to continue to rise, but at slow rates” – a trend consistent with early 2024 observations,” Davidson said.
Despite improved confidence levels in the housing market, challenges like affordability constraints and high mortgage rates persist, influencing the market’s dynamics.
Looking ahead
The outlook for interest rates remains high into 2024, affecting both prospective and existing homeowners.
“Overall, interest rates look likely to stay fairly high for most of 2024,” Davidson said, suggesting that further clarity on potential rate cuts may emerge with the next OCR decision on May 22.
The market awaits the upcoming consumer price inflation data for the first quarter of 2024, which could influence future monetary policy decisions.
Read Davidson’s commentary here.
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