The five things you need to know about the housing market this week.
1. Wednesday. 2pm.
I’m guessing most Kiwis know what the above headline is about. That’s right, the OCR. On May 27, the Reserve Bank will publish its latest Monetary Policy Statement, and announce any changes to the Official Cash Rate. It's increasingly likely that the RBNZ will leave the OCR at 2.25%, but a hike is coming, with many commentators eyeing the July and September announcements as the ones to watch.
On that note, much of the focus on Wednesday’s MPS will be on the RBNZ's analysis, forecasts, and commentary, as well as each committee member's vote - a new feature of the statements. The projections for CPI inflation and the OCR will be the two most important numbers to check, followed by things like GDP, employment, and house prices.
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All of this will tell us much about the scale and timing of any OCR increases to come. I'm picking July or September – maybe both – but I’m also very conscious of the downside risks to the economy and hence also inflation (although there are obviously also plenty of upwards price pressures too).
Suffice it to say, I can’t recommend any particular borrowing strategy. But if recent signs that the economy is turning down are sustained, any increases in the OCR may not be sharp or prolonged, which suggests something vaguely similar for mortgage rates.
2. Retailers still battling
Speaking of the economy, last week’s key releases had a distinctly consumer-sector focus, with the performance of services index below the 50 rise/fall mark in April, and nominal electronic card spending enduring a very tough month too – even though prices have risen. In other words, behaviour already seems to be changing and wallets are being closed.
In key markets such as Auckland and Wellington, the sluggish services/retail sector helps to explain some additional house price weakness too.
3. Finally a slowdown for mortgage lending as well?
Meanwhile, mortgage lending flows have performed pretty well over the first few months of the year, even though the number of underlying property sales has softened. On Tuesday this week the RBNZ will publish April’s lending stats, and I just wonder if we’ll finally see a clearer slowdown. Even if we don’t, the release is always intriguing regardless, as it also has breakdowns by LVR, DTI, and loan type (e.g. house purchase, bank switch/refinance).
Cotality chief economist Kelvin Davidson: "Major giveaways seem pretty unlikely." Photo / Peter Meecham
4. Have filled jobs done their dash?
This week we’ll also get filled jobs figures for April from Stats NZ on Thursday. The numbers held up pretty well in March, but were always likely to take a bit longer than some other indicators to show any reaction to the Iran conflict. Clearly, employment will hold a big key to how the housing market fares in the coming months, so this is an important release on Thursday – and could be softer.
5. The Budget might come and go fairly quickly
We’ve also got Budget 2026 on Thursday at 2pm, but I’m struggling even more than normal to get particularly excited about it. Any major giveaways seem pretty unlikely and it may well pass into history quite quickly. On the property front, there certainly don’t seem to be any major policy announcements looming, although never say never, I suppose.
- Kelvin Davidson is chief economist at property insights firm Cotality
