City Sales See Things Getting Harder for Buyers

City Sales have observed the rise of the OCR, with expectations that it will continue to rise, which means bank interest rates will also climb. This is going to affect buyers, particularly first home buyers. 

The Monetary Policy Committee recently agreed to increase the Official Cash Rate (OCR) to 0.50 per cent. Consistent with their assessment at the time of the August Statement, it is appropriate to continue reducing the level of monetary stimulus so as to maintain low inflation and support maximum sustainable employment. 

This will lead to the near-term rise in inflation which is accentuated by higher oil prices, rising transport costs and the impact of supply shortfalls. These immediate relative price shocks risk leading to more generalised price rises. At this time, measures of core inflation and medium-term inflation expectations remain close to 2 percent. 

As required by their Remit, members assessed the impact of monetary policy on the Government’s objective to support more sustainable house prices. The Committee noted the Reserve Bank’s assessment is that the level of house prices is currently unsustainable. Members noted that a number of factors are expected to constrain house prices over the medium term.  

These include a high rate of house building, slower population growth, changes to tax settings, and tighter bank lending rules. Rising mortgage interest rates, as monetary stimulus is reduced, would also constrain house prices to a more sustainable level. Members noted a risk that any continued near-term price growth could lead to sharper falls in house prices in the future. 

As City Sales’ Scott Dunn finishes, “ With the trend of interest rates and bank lending criteria, things are looking to get harder for buyers, particularly first home buyers. We’re keeping an eye on what this will mean for our apartment market which is influenced heavily by investors”, so with this in mind, please take a moment to find out more about real estate agents Auckland and property managers Auckland by visiting the website at www.citysales.co.nz .