The OCR and first home buyers

Could relief finally be here for thousands of New Zealanders who want to finally climb onto the housing market to buy their first home?

For generations, home ownership was seen as a rite of passage for many Kiwis, and it was only in the 1980s, with massive economic deregulation, that would-be homeowners saw the prospect of home ownership disappear.

The Reserve Bank of New Zealand cut the OCR (Official Cash Rate) by 50 points to 2.5 per cent on October 8, to stimulate economic activity. As the cost of borrowing money becomes cheaper, demand for real estate may increase.

Harcourts Port Realty director and shareholder Kevin Seymour said it may be a good time for people to buy their first home.

“It’s been quite a good time for the last three or four months, and with the OCR coming down, that is going to continue, so that will give them (first home buyers) confidence to keep going.

“The demand has been quite good in the last three months; we’ve had extremely good volumes of first home sales in the last three months. The OCR going down will continue that, yes, demand will properly lift a bit.

“We can never tell when the market’s at its bottom, because you can never tell until it starts to lift. But there are signs that the market’s been stable for three or four months, so it’s reasonable to think that people should be buying now.”

Neet Dhiman, a mortgage advisor from Mortgage Supply Co agreed that it could be a good
time to buy.

“For first-home buyers, this creates a window of opportunity. Lower interest rates mean improved affordability — repayments become more manageable, and buyers may qualify for higher loan amounts.

“I’d expect a gradual pickup in demand over the coming months rather than a sharp surge — the recovery will likely be steady as banks continue to adjust their rates and buyers reassess their options.”