interest rate rises

PHOTO: While today’s drop may look small on paper, the flow-on effects for the property market will be anything but. FILE

PropertyNoise.co.nz – Independent. Kiwi-Owned. EST. 2015

💥 RBNZ DROPS OCR – AND THE RIPPLE EFFECT INTO 2026 BEGINS NOW

The Reserve Bank of New Zealand delivered what many economists were expecting – a 25bp cut to the Official Cash Rate, signalling the start of a more accommodative monetary cycle.

While today’s drop may look small on paper, the flow-on effects for the property market will be anything but. Banks are already modelling lower wholesale funding costs, investors are running the numbers, and first-home buyers are shifting from “wait and see” to “maybe now is the time”.

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📉 WHY TODAY’S CUT MATTERS MORE THAN IT LOOKS

For the past two years, high interest rates have been the biggest brake on the housing market.
• Mortgage serviceability was tight
• CCCFA rules added friction
• Listings built up as sellers waited for better conditions
• Buyers struggled with stress-test rates over 9–10%

Today’s OCR drop finally signals a turning point.

Banks don’t respond instantly, but historically, within 4–12 weeks we see:

  • Lower fixed mortgage rates (first in 1-year and 18-month terms)

  • Increased borrowing power

  • Higher approval volumes

  • Rising open-home activity

This is the early spark that fuels the following year’s price movement.

🔮 SO WHAT HAPPENS TO HOUSE PRICES IN 2026?

Our modelling, combined with economist commentary across the major banks, suggests 2026 will be the first true growth year since the 2021 peak.

Here’s the PropertyNoiseNZ forecast ⬇️

📈 1. Buyer demand will recover faster than expected

Once mortgage rates start approaching the low-5% range, pent-up demand comes alive.
First-home buyers—who’ve been sitting on sidelines since mid-2022—will re-enter aggressively.

🏠 2. Investors return (quietly at first)

If interest deductibility remains, or if there are any further tweaks to tenancy or tax policy, 2026 could see a mini-investor comeback, especially in:

  • Auckland fringes

  • Waikato

  • Manawatū

  • Christchurch

  • Queenstown corridor

Lower interest rates + rising rents = improved yield conditions.

📉 3. The supply crunch will push prices up

Building consents have collapsed in 2024–25.
This means that by late 2025 and throughout 2026, supply will not keep pace with demand.

This imbalance leads directly to upward price pressure.

📊 4. National price growth forecast: 5–9% in 2026

A balanced and realistic projection for the wider country.
Hotspot regions may see double-digit rebounds.

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🧮 WHICH REGIONS BENEFIT MOST FROM THE OCR DROP?

Auckland

Rate-sensitive, investor-heavy, and already showing early signs of stabilisation. Expect a strong 2026.

Wellington

Oversupply clearing + cheaper credit = recovery through 2025, growth in 2026.

Christchurch

The steady performer. Low volatility + buyer confidence = continued gains.

Regional NZ

Where affordability still exists, price increases could be sharp once rates fall into mid-5% territory.

⚠️ WHAT COULD STILL HOLD THE MARKET BACK?

No forecast is complete without risk factors:

  • Global recession or geopolitical shock

  • Banking sector tightening credit criteria

  • Policy changes before the 2026 election

  • Inflation re-accelerating (forcing RBNZ to pause or reverse cuts)

But right now, the forward indicators lean positive.

🏁 BOTTOM LINE: TODAY’S OCR CUT IS THE FIRST STEP TOWARD A 2026 HOUSING REBOUND

Today’s decision won’t instantly boost house prices—but it does set the foundation for:

  • Falling mortgage rates

  • Rising buyer confidence

  • Stabilised listings

  • Stronger 2025 activity

  • A proper 2026 price-growth cycle

For buyers, sellers, agents, and investors—the turning point may officially be here.

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