“Unemployment is at 5.2 per cent and expected to climb further, while underutilisation is increasing and both business and consumer confidence are weak,” Ray White chief economist Nerida Conisbee said.
“Migration outflows remain elevated, eroding the labour force while domestic spending softens.
“With inflation steady at 2.7 per cent, the RBNZ had scope to move decisively. By front-loading stimulus, the central bank aims to shore up confidence and prevent conditions from worsening further.
“For households, the larger cut should translate to more meaningful mortgage relief, supporting budgets and spending.
“For housing, the impact may be stronger, with prices stable at $761,000, listings at 110,000, and sales plateaued at 78,000.
“A larger cut could tilt sentiment upward, though the market remains one of equilibrium rather than growth.
“This decisive action signals the RBNZ is willing to act forcefully to counter the downturn, leaving the door open for further easing in 2025 if unemployment continues to rise.”
Ray White New Zealand chief executive Daniel Coulson applauded the Reserve Bank on its “decisive” move.
“Today’s decision was a clear signal that it recognises the need for meaningful economic stimulus,” he said.
“After a prolonged period of financial pressure, today’s decision will be warmly received by mortgage holders, aspiring homeowners, and business owners alike.
“This move acknowledges that cost-of-living challenges have weighed heavily on confidence and spending. By acting decisively, the RBNZ has provided much-needed breathing room and reignited optimism that the economy can return to a more sustainable growth path.
“For home buyers, reduced borrowing costs mean budgets can now stretch further, improving purchasing power and creating new opportunities across the property market.
“Each time we have seen a similar move in the past, it has had an immediate positive effect on sales activity, with confidence and enquiry levels rising in the weeks that follow.
“The balance between new listings and sales has already begun to calibrate with demand increasing over recent months and Ray White New Zealand saw national sales volume increase 9.6 per cent in September.”
