OCR hold likely to keep housing recovery ticking over
Wednesday, 8 April 2026
The decision by the Reserve Bank of New Zealand to leave the Official Cash Rate unchanged at 2.25% will help a steady and stable trajectory for New Zealand’s housing market recovery.
Realestate.co.nz’s Vanessa Williams said there was a lot of nervousness from Kiwis about what was next, between the cost of food and goods, fuel prices and global conflict.
“We were just starting to see green shoots and confidence then it’s a war. I think people are a bit exhausted by it all at the moment,” she said.
The hold on the OCR would allow people to feel a bit more settled.
LJ Hooker Head of Research Mathew Tiller said the decision would help underpin gradual improvement without placing additional strain on households already worried about rising costs and the global fuel crisis.
“This hold provides borrowers with a level of certainty and avoids adding pressure to household finances at a time when the economy is still finding its footing.”
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“Confidence is still the missing piece. Buyers are cautious and households are continuing to manage their budgets carefully, which is limiting the speed of recovery.”
Tiller said the hold was widely anticipated and represented the least disruptive outcome for both borrowers and the broader property sector.
“The decision reflects an economy that is still soft, with inflation easing but remaining slightly elevated, and a housing market that is stabilising rather than accelerating.
“While there are some emerging risks, including higher oil prices and ongoing global uncertainty, there was not enough in the data to justify a move from the Reserve Bank at this time.”
The impact on the residential property market was likely to be one of continuity rather than change, Tiller said.
“A hold in the OCR should see the housing market continue along its current path. It supports confidence and provides stability, but on its own it is unlikely to drive a sharp increase in prices or activity.”
He noted that recent data indicated the market may be moving past its low point.
“We’ve now seen two consecutive months of modest growth in home values, suggesting the downturn has likely found a floor. However, values remain below where they were a year ago and are still well under previous peak levels.”
Lower mortgage rates have provided some support, but Tiller said buyer sentiment remained a key factor.
First-home buyer Rebecca McKean said she and her partner locked in a two-year fixed rate earlier this year after a last-minute warning from their mortgage broker.
“Our mortgage broker rang us about 7pm one night and said interest rates are going to go up tomorrow and we had to have some hard conversations,” she said.
The couple purchased their Orewa home in February, navigating a steep learning curve around lending and finance, and ultimately relying on family support when they were unable to use KiwiSaver funds at auction.
Loan Market NZ adviser Logan Reardon said while a ceasefire in the Iran conflict announced earlier in the day was a positive development, global uncertainty continued to weigh on sentiment.
For first-home buyers, high living costs and ongoing geopolitical tensions were creating a sense of unease, while investors had largely stepped back from the market.
“Investors are pretty much off the boil at the moment as people wait out the uncertainty,” he said.
Cotality data shows 59% of fixed rates are set to expire over the next 12 months, with homeowners then likely facing higher interest rates.
Ray White Group economist Atom Go Tian said the hold extended the conditions that had supported the recovery in listing activity and sales volumes.
“The national median reached $795,000 in February, the first back-to-back months of positive annual growth since the post-pandemic correction,” he said.
“The domestic economy continues to recover, but momentum remains weak.”
Tian said the decision reflected a deliberate judgment that higher oil prices were a global phenomenon that raising interest rates could not fix. Doing so would risk slowing a recovery that was still finding its footing, without meaningfully bringing petrol costs down.
Ray White New Zealand chief executive Daniel Coulson said the Reserve Bank’s decision reflected a continued “wait-and-see” approach as offshore economic conditions remained uncertain.
“While that caution is understandable at a policy level, we are seeing a different response in the housing market. Buyers and sellers have been gradually and consistently re-engaging rather than standing still,” Coulson said.
He expected to see continued gradual improvement in property market activity.
The central bank said it expected inflation to come in at 3% in the March quarter and rise to 4.2% in the June quarter.
Cotality’s chief property economist, Kelvin Davidson, said it was still a wait-and-see mode on Iran, inflation, the economy, the official cash rate, and a whole lot more besides – with the news earlier in the day of a two-week ceasefire just adding to this fast-moving situation.
“For the property market, uncertainty still prevails too. A lasting ceasefire may limit any effects on housing activity and prices. But there’s already been a drift higher for mortgage rates and/or a softer economy would also tend to be restrictive for property,” he said.