“Unemployment has risen to 5.3 per cent, the highest since the pandemic, and job advertisements continue to decline as the labour market weakens,” Ray White Group chief economist Nerida Conisbee said.
“Population growth remains subdued, with a net migration gain of just 12,400 in the year to September, the lowest September result since 2013 outside the pandemic.
“Annual inflation has eased to 3.0 per cent, giving the central bank enough room to provide further support as demand cools.”
Ms Conisbee said the housing market remained in equilibrium.
“The national median price rose to $786,000 in October and has remained within a tight range for more than two years,” she said.
“Listings have climbed to 111,580, the highest level since 2021, while annual sales have increased to 79,731. A stable 71.5 per cent sales-to-listings conversion rate shows that even with elevated supply, homes are still clearing efficiently.
“Today’s cut will help ease mortgage pressure but is unlikely to trigger a surge in prices. Instead, it supports a market driven by fundamentals and genuine buyer need rather than speculation.
“This measured reduction signals the RBNZ is prepared to ease further should unemployment continue to rise and confidence weaken.”
Ray White New Zealand chief executive Daniel Coulson said the cut was a step in the right direction.
“However, it does not go far enough to provide the stimulus that New Zealand’s economy genuinely needs,” Mr Coulson said.
“Confidence remains fragile across households and business owners, and today’s move is unlikely to shift behaviour in a meaningful way. The impact of constrained lending, elevated operating costs, and a soft labour market continues to put pressure on employers and employees alike.
“There is a desire for New Zealand to build an economy that is less reliant on residential property for stability and wealth creation, however, we cannot simply wish that outcome into existence.
“As we stand today, the housing market remains one of the most immediate levers available to support growth.”
Mr Coulson said thanks to past OCR reductions, the market was in a more stable position than it had been over the past couple of years.
“Values are yet to fully recover, but transaction volumes have returned to more traditional norms which provides a solid platform for activity and confidence,” he said.
“Increased momentum in the housing market directly influences construction, small business investment, and employment.
“Many small business owners rely on the equity in their homes to fund growth. Today’s modest reduction will be welcomed by those operators, but it is unlikely to unlock the level of activity required.”
With the next RBNZ announcement not scheduled until February 2026, Mr Coulson said there was now a long period without additional monetary intervention.
“The economy needs more decisive support to encourage spending, investment, and job creation,” he said.
“A stronger adjustment today would have provided greater momentum heading into the new year. As it stands, the burden of driving economic recovery remains with households and business owners who are already under pressure.”
