OCR Drop Sparks Market Optimism

The Reserve Bank’s much-anticipated Official Cash Rate (OCR) cut on February 19 did not disappoint, says Daniel Horrobin, Director of City Realty Group.

As reported by Stuff on February 20, the OCR was lowered by 50 basis points to 3.75%, with banks quick to respond by matching the drop. This move was widely expected, and many banks had already been reducing interest rates ahead of the announcement.

At exactly 2pm, as soon as the Reserve Bank confirmed the cut, Kiwibank was the first to adjust its home loan and business lending rates, setting off what the NZ Herald has since described as a “Mortgage War” as banks across the board followed suit.

Across the industry, confidence is on the rise. According to Realestate.co.nz, January 2025 saw new listings surge to levels not seen in a decade, signaling renewed momentum in the market.

The Chief Executive of the Real Estate Institute echoed this sentiment, stating that while January is typically slow due to the holiday period, sales and listings were higher than in January 2024, with strong open home attendance and positive buyer sentiment nationwide.

Economic commentator Tony Alexander also sees a clear market turnaround, noting that annual residential property sales in New Zealand have climbed from 59,000 in mid-2023 to nearly 71,000 today.

On our own Auction floor, momentum has continued to build. Following a $1 reserve property that sold for $52,000 at our monster 30 January Auction, February saw a residential auction brought forward, selling for $3.5 million, well above the pre-auction offer. Additionally, a central city apartment achieved $1.6 million, marking a record price for the year.

Also noteworthy were two recent City Realty Group residential auctions. While the results were outstanding, with both properties selling under the hammer, what stood out even more was the huge turnout. In both cases, the crowds were so large that they spilled over into adjoining outdoor spaces, highlighting the growing interest and confidence in the market.

Reflecting earlier reported new listings activity, the central city market is also bouncing back to levels not seen for nearly 12 months.

“Taking all of this into account,” says Daniel, “we’re looking ahead to a big year. Both sellers and buyers can take confidence from the noticeable increase in activity, and perhaps most importantly, a sense that a market recovery is well underway.”