OCR rise likely to keep house buyers cautious and willing to wait
Wednesday, 8 July 2026
Just as the housing market appeared to be gaining some confidence, the Reserve Bank has delivered another tweak with an official cash rate rise.
The nail-biting uncertainty economists had been predicting for the last few weeks ended with the Reserve Bank raising the official cash rate by 25 basis points to 2.5% on Wednesday.
Realestate.co.nz chief executive Sarah Wood said uncertainty and the impact of movement in the OCR was just as disruptive to buyer and seller confidence than the rate level itself.
She said according to their June report the market was finally finding its feet - albeit in a stable way - with the busiest listing month since June 2020.
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The Reserve Bank said the increase came after a partial reopening of the Strait of Hormuz and global oil prices had fallen markedly. Other petrochemical prices have also moved lower. As a result, near-term inflation pressures have eased.
“Although energy prices have decreased, the effects of the shock will linger for some time and the outlook for medium-term inflation pressures remains uncertain. The stance of monetary policy is calibrated to bring inflation back to target without causing unnecessary economic instability.”
Wood said stability was helpful for sellers and buyers. While many had described the market as slow or sluggish, what it was at the moment was predictable.
There were not going to be huge prices or value increases and for households fixing budgets or deciding whether to jump into the market, it meant a degree of certainty.
She said the reality was it would take some time to flow through to the market
LJ Hooker’s head of research, Mathew Tiller, said increasing the official cash rate would add further pressure to borrowing costs for some households but would not change the housing market overnight.
“Instead, it reinforces the more measured conditions that have been evident over recent months.”
He said activity remained steady across the housing market, however buyers were still price conscious and prepared to wait for the right property.
“Higher borrowing costs are likely to keep that mindset in place, with buyers continuing to take longer to make decisions, ask more questions and carry out more due diligence before committing.
“It's also becoming more of a two-speed market. Some regional areas continue to perform well where affordability remains attractive and demand has held up, while many of the larger centres, where stock levels are higher, are seeing softer conditions. That's why national averages only tell part of the story. Increasingly, market performance is being driven suburb by suburb and price point by price point.”
Tiller said the increase was likely to reinforce the conditions that were already in place rather than create any significant shift in the market but could put a lid on any buyer urgency making realistic pricing, quality presentation and well-informed expectations even more important for vendors.
Quotable Value spokesperson Simon Petersen said looking ahead, the second half of the year would bring no shortage of important economic and political milestones for the housing market, beginning with today’s OCR announcement.
“Whether that affects buyer behaviour in the short term remains to be seen, but it will certainly become an important part of the wider economic backdrop as we move through the second half of the year.”
Cotality’s chief property economist, Kelvin Davidson, said for the housing market it was really just (subdued) business as usual.
“On one hand, the US-Iran peace deal has already seen lower fuel prices and a boost to consumer confidence, as well as falls in mortgage rates, although that might not go further.”
He said a continued economic recovery in the coming months, even if or when the OCR rose again, would tend to bolster sales volumes and property values too.
“But a fresh boom seems very unlikely. Indeed, listings remain elevated, giving buyers the balance of power on pricing. The election – and potential tax changes – appears to be dampening investors’ moods too.”
Ray White’s economist, Atom Go Tian, said the most recent housing data predated the OCR decision by a month and showed a market holding steady rather than falling.
“A flat market has little cushion against higher borrowing costs. Whether prices hold from here or begin to slip will depend on how much of today's move lenders pass on to mortgage rates, set against the support from a firmer annual figure and cheaper fuel,” he said.
The next OCR announcement is in September.