Will the Reserve Bank raising the Official Cash Rate this month and in April set back the housing market just as it’s starting to stabilise in Wellington?
Nicki Cruickshank, Sales Director at Tommy’s Real Estate, remains optimistic despite looming interest rate hikes in response to inflation concerns from the Reserve Bank.
Initially feared to potentially increase by 0.75 points, economists now anticipate a more modest rise of around 0.50 points in the Official Cash Rate (OCR).
Nicki reflects, “The market seems to have settled into a plateau, which is encouraging buyers to return with renewed confidence.”
She notes, “Since mid-January, open home attendances have been the strongest we’ve seen in over a year. There’s a notable presence of first-home buyers who had struggled with finance last year but are now back in the market.”
Nicki highlights a shift in investor sentiment, saying, “There are indications of investors cautiously re-entering the market. They traditionally comprised about 25% of Wellington’s market but have been nearly absent over the past year.”
Regarding the impact of potential OCR hikes on buyers, Nicki explains, “Buyers are preparing for the anticipated increase, hoping it stays below the initial projections. Banks are stress-testing applicants at rates significantly higher than the current level to ensure they can manage any future rises.”
She adds, “Despite higher interest rates, the market benefits from lower house prices, which soften the financial impact for buyers. There’s also optimism that rates may eventually decrease, specially with banks offering competitive rates for longer-term loans.”
Reflecting on buyer sentiment compared to last year, Nicki observes, “Buyers are showing more confidence this year, despite the cautious approach seen in the previous year.”
“While the market appears stable now,” she cautions, “sudden fluctuations can create uncertainty. However, buyers are adapting to current interest rate realities, which currently align with the long-term average of around seven percent.”
Looking ahead, Nicki predicts a relatively stable market in the short term.
“The pace of house sales may be slower compared to last year’s highs, but quality properties continue to attract interest.”
“With Wellington’s appeal growing, fueled by recent weather events, the city remains an attractive destination,” Nicki concludes optimistically. “Who knows? We might even see a surge of interest from Aucklanders looking to make Wellington their new home.”
Connect me with a local expert
Whether you’re ready to sell or looking for answers, we’ll guide you with data-driven strategy paired with over 20 years of industry experience
Book a free appraisal
