All eyes on the Official Cash Rate as housing market waits for its next move
Monday, 6 July 2026
With the fourth Official Cash Rate announcement of the year on Wednesday, how it will affect a sluggish property market hoping to find its feet after global uncertainty is a matter of some debate.
ANZ’s Property Focus report had previously forecast house prices would continue to drift down by another 2% based on interest rates rising, speculation on taxation on housing as part of election promises and the oil crisis.
Now with one of those easing, ANZ economists are wondering if the property market might outperform its own prediction.
Most commentators are predicting a rise in the official cash rate, or at the least a hold.
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The report said house prices had remained “on a largely flat path” despite a series of economic pressures, with both buyers and sellers stepping back and creating a stalemate in the market.
The latest REINZ House Price Index showed nationwide prices rose 0.3% in May after adjusting for seasonal factors, continuing a pattern of small monthly increases and decreases rather than a decisive move in either direction.
Prices remained down 0.5% compared with a year ago, but the regional picture remained mixed. The South Island had continued to show a slight upward trend, Wellington had continued to soften, while Auckland and much of the rest of the North Island had remained largely flat.
ANZ said one of the key reasons prices had avoided a sharper decline was sellers had also pulled back. That meant fewer homes coming to market, limiting the downward pressure that might normally come from weaker demand.
Other measures suggested the market remained subdued. Auction clearance rates had eased and properties were taking roughly as long to sell as they had over the past year.
In other words, the market is not booming - but it is not collapsing either.
Cotality NZ chief property economist Kelvin Davidson said despite being only one part of the overall housing market equation, the Reserve Bank still remained a key player in how the rest of the year panned out.
Davidson said that even if the OCR stayed unchanged in July, an increase looked likely later in the year which was the expectation even before the conflict began.
He said mortgage rates had stabilised recently, and there may not be much additional upwards pressure in the near-term.
“But people are probably sensibly still looking at longer-term fixed rates regardless, as insurance against any further upside as we move later into 2026 and beyond.
“All in all, sellers aren’t generally under much duress, and buyers aren’t really rushing either. Listings remain elevated and these conditions suggest a continuation of recent, subdued price patterns in the coming months.”
New Zealand property values edged lower in June and Davidson said it was likely reflecting the spillover impacts from Iran-related economic uncertainty and the mortgage rate rises previously seen.
Cotality NZ’s latest Home Value Index (HVI) showed the national median value in June of $806,512 was down by -0.2% from the previous month, pushing the total drop over the past three months to -0.8%.
Davidson said sales volumes were continuing to weaken as each month passed.