Rates, trends, and market outlook
As New Zealand's property market takes a cautious step forward this November, Squirrel’s NZ property market update for November dives into the impacts of Trump’s US election victory, a possible OCR cut, and a cautiously optimistic housing market.
US election raises global economic concerns
Squirrel reflected on the recent US presidential election, in which Donald Trump secured a second term over Kamala Harris. With Republican control over the Senate and a likely hold on the House, Trump’s influence is expected to be significant.
Squirrel noted that the impact on New Zealand could include tariff risks on exports or economic shifts if major trading partners, like China, face recessionary pressures.
Anticipation builds for November OCR announcement
The final OCR announcement for 2024, scheduled for Nov. 27, is expected to bring a 0.50% cut, reducing the OCR from 4.75% to 4.25%.
Squirrel reported current advertised one-year mortgage rates around 5.79%, though recent weeks have seen some lenders negotiate down to 5.59%.
Should the OCR drop as anticipated, advertised rates could decrease further, with some speculating three-year fixed rates might dip below 5% by year-end.
Housing market shows subtle uptick in demand
October’s OCR cut has encouraged high-income buyers to return to the property market, with increased demand seen in well-presented homes in desirable areas.
However, Squirrel indicated that some areas with slower demand may require price adjustments to attract buyers. A slow recovery is expected, with declining interest rates bringing cautious optimism for the property sector.
Cautious economic sentiment amid uncertainty
While interest rate cuts provide some relief, Squirrel highlighted that many Kiwis are focused on debt reduction and financial stability over new spending.
Rising unemployment has also dampened economic sentiment, especially in sectors like hospitality and tourism, which may see temporary improvement as the summer holiday season approaches.
The report suggested that real recovery may only take hold after unemployment stabilises, likely by mid-2025, as consumers regain confidence.
Outlook: Gradual recovery with global impacts
Squirrel’s report underscored that while gradual improvements are likely, a major economic boom is not on the horizon.
Instead, New Zealand can expect a steady, modest recovery as global and local conditions continue to influence the financial landscape.
The coming months will require a watchful approach, as external factors like the US election aftermath and trading conditions impact the broader economic outlook.
Read Squirrel’s NZ property market update on LinkedIn.
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