The Real Estate Institute of New Zealand (REINZ) believes the Reserve Bank's decision on Thursday to hike the Official Cash Rate by 25 basis points to 2.75% and foreshadow further small hikes would be good for the property market.
REINZ President Peter McDonald said the property market would not be adversely affected by the move, partly because future increases would be restrained. Potential home buyers should not have any reasons to hold off buying now the budget had been delivered and the outlook for interest rates was clearer.
“In fact home buyers are being promised a market environment in which they can safely plan long term as Reserve Bank Governor Dr Alan Bollard has indicated any further increases in the OCR will be only gradual if needed at all,” McDonald said.
“Interest rates are only one of many factors which influence the property market,” McDonald said.
“While Dr Bollard notes that households continue to be cautious about investing in homes, median prices are still up on a year ago as we have not yet caught up on the supply shortage caused by the fall in the building of new houses during the recession,” he said.
“It must also be reassuring for home buyers and investors that the Reserve Bank has found clear signs we are well into a recovery with businesses planning increased investment and unemployment still trending downwards. So those people who have been holding off on plans to buy a home can be confident it is a good time to go ahead.”