ANZ economists expect the OCR to be cut to 2.5% by the end of the year but point to it going back up at some stage
ANZ’s economists have cut their house price growth forecast for this year to zero.
“Given soft near-term price momentum, we have trimmed our 2025 house price inflation forecast from 2.5% to around zero,” they say in their latest NZ Property Focus report.
However they also expect the Reserve Bank (RBNZ) to keep downward pressure on mortgage interest rates by reducing the OCR from the current 3%, to 2.5% by the end of the year.
“This will support a gradual recovery in the housing market and the wider economy, and we continue to expect 5% house price growth in 2026,” the report says.
“There is a chance that the Reserve Bank’s easing stance triggers a quick lift in sentiment in the housing market, but we expect the shift in sentiment will be gradual given lingering headwinds from a soft job market and high inventories of property for sale,” it says.
However the economists also point to the possibility of an eventual rise in interest rates.
“We also expect house price growth will be tempered by expectations that interest rates will eventually lift back up from low levels,” they say in the report.
“While a lower OCR will reduce interest costs for a year or two, neither [we nor] the RBNZ nor the market expect lower interest rates to stick around for the longer term,” they say.
“Buyers are likely to factor this in – it can also be seen in the fact that five year mortgage rates have dropped by much less than shorter term mortgage rates,” the report says.
“On top of this, the cost of council rates and insurance is higher than it was in the past and rents on new tenancies are falling.
“This will collectively temper buyers’ enthusiasm and the willingness of existing owners to hold on to property, even with a lower OCR,” the report says.
