Squirrel the latest update on how the recent changes are shaping the market
As the month concludes, Squirrel provided a focused update on New Zealand’s housing market, noting recent shifts and the key developments impacting this sector alongside broader economic and interest rate changes.
Overview of New Zealand’s economic landscape: Global influence and local impact
March has seen significant international developments, particularly in the United States, where political turmoil and economic policies are causing waves globally.
With every new development from the US, especially concerning trade and economic policies under President Donald Trump, there is potential for significant economic repercussions worldwide.
For New Zealand, a major concern is how US policies impacting global trade could not only drive the US into a recession but also affect global markets, including New Zealand, given its deep economic interconnections, Squirrel reported.
Despite these challenges, New Zealand’s economy has some protective measures in place.
Its focus on essential goods like food and commodities provides a buffer against global economic shocks. Moreover, the hardships faced in previous years have fortified the economy, preparing it to handle further global economic slowdowns without severe domestic repercussions.
Recent rate movements and forecasts
The OCR in New Zealand has recently seen a reduction, with the latest 50-basis-point cut to 3.75%, bringing some mortgage rates below the 5% mark, a significant relief for borrowers.
The most notable rates affected are the two-year fixed-term rates, now sitting at 4.99%. The one-year rates remain slightly higher but are expected to decrease following anticipated further OCR cuts, with the next announcement on April 9th predicted to lower the rate by an additional 0.25%, potentially bringing it down to 3.5%.
This decrease in interest rates is arriving at a crucial time.
As New Zealand possibly emerges from recessionary pressures, the lower rates are expected to stabilise rather than fall much further. For homeowners or potential buyers, locking in a rate at 4.99% could be a prudent decision under the current economic climate, Squirrel said.
New Zealand housing market dynamics
Despite renewed buyer confidence in the New Zealand housing market, bolstered by falling mortgage rates, a high supply of properties, and stable prices, challenges related to oversupply persist, complicating the otherwise favourable conditions for purchasers.
While demand is gradually increasing—spurred by the lowering of interest rates—this is primarily serving to balance the existing disparity between supply and demand rather than to drive up house prices, Squirrel reported.
Transaction levels are on the rise, which helps in clearing some of the market backlog, but significant price increases are not expected in the near term.
Looking ahead, the housing market’s recovery is anticipated to be slow, with a more robust turnaround not expected until 2026 or 2027. This outlook is heavily dependent on developments in the US and their subsequent effects on the global economy, Squirrel said.
