30 June 2010
An increase in the Official Cash Rate (OCR) this month had some investors concerned about the stability of the property market and property prices moving forward.
However Reserve Bank Governor Dr. Alan Bollard has said that because more than 30% of mortgage debt is on floating rates and the long term rates are now higher than short term, the OCR will not need to be increased at the same speed as previous recoveries.
The Real Estate Institute of New Zealand (REINZ) President Mr. Peter McDonald says “Interest rates are only one of many factors which influence the property market. While Dr. Bollard notes that households continue to be cautious about investing in homes, median prices are still up on a year ago as we have not yet caught up on the supply shortage caused by the fall in the building of new houses during the recession.”
Mr. McDonald goes on to say that the Reserve Bank has found clear signs that the New Zealand economy is well into recovery, which should be reassuring for first home buyer and investors.