Key Facts

  • The Reserve Bank forecasts a 5% annual rate of consumer price inflation (CPI) for Q4, with a higher rate suggesting possibility of Official Cash Rate increase.
  • A less than 5% inflation rate could calm worries about another OCR rise.
  • Stats NZ reveals rental market continues to favour landlords, with 7% increase in rent over a year.
  • First-home buyers hold a high share of property purchases, with CoreLogic Buyer Classification report showing a 27% share in Q4.
  • Mortgaged multiple property owners (including investors) accounted for only 21-22% of market activity, nearing a dip from the norm of 25-26%.
  • The CoreLogic House Price Index rose by 1% in December, with expectations that 2024 will see variable prices.
  • Sales volumes across agent-led and private sales were up by almost 30% from December last year, but were still about 25% lower than the norm.

Article Summary

The Reserve Bank has hinted that an increase in the official cash rate might be needed if the fourth quarter’s consumer price inflation (CPI) exceeds the forecasted annual rate of 5%. Conversely, a rate of less than 5% will quell fears about another OCR increase. With prevailing global issues including conflicts and rising shipping costs, financial experts advise to watch Wednesday’s CPI announcement closely.

The current rental market is largely in the favour of landlords, with Statistics New Zealand revealing that rents increased by 7% in December in comparison to last year, largely driven by high property demand and tight supply of rental properties. However, the present rental rates are high compared to household incomes, suggesting growth limits. Despite this, short-term rent increase is likely.

First-time home buyers continue to maintain a high share of property purchases. The CoreLogic Buyer Classification report has revealed a 27% share for this group in the fourth quarter, driven by factors such as access to KiwiSaver, low deposit lending allowances and reduced competition. On the other hand, mortgaged multiple property owners (including investors) have a 21-22% share of activity, lower than the usual 25-26%.

The market saw property values rise in December, as recorded by the CoreLogic House Price Index, but sales volume remained relatively subdued. Although both agent-led and private sales were 30% higher than last year, they were still approximately 25% lower than the norm. Thus, while there is some pick up in sales activity, volumes are yet to normalize.

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