As predicted, the Reserve Bank took another bold step in slashing the Official Cash Rate by 50 basis points in November, bringing the all-important number down to 4.25%.

The OCR now sits at its lowest level since November 2022, with the RBNZ indicating further cuts to come as we head into 2025.

With lower interest rates more people have been able to enter the market, providing a much-needed boost to an area dealing with an oversupply of listings.

“It’s a good thing, and generally most of our agents are reporting that the residential market is now in a reasonably neutral state” says Chris Farhi, Bayleys Head of Insights, Data and Consulting.

Farhi says it’s a big contrast to six months ago when most saw the market as relatively weak.

“It's not the sugar rush that we had in 2020 and 2021, but it's kind of back to a more normal state.”

“I think one of the good things about the market at the moment is that you can sell and buy in the same sort of market conditions. So, you're not having to worry about prices going wildly out of control and leaving you behind in the time it takes to do two transactions.”

But Farhi believes kickstarting the market is still a slow burn and says the drop in OCR hasn’t turned the light back on, but it’s slowly increasing the dimmer instead.

“There are two opposing forces happening. We’ve got interest rates coming down which is good, but on the flip side we’ve got a lot of stock that has built up over the past year.”

Which means prices are likely to stay relatively stable for some time.

“In December there were around 29,500 homes available for sale across the country, which was about 19 percent up on the same time last year.”

Farhi says increasing the dimmer has meant more enquiries from buyers and appraisal requests from vendors, but not quite as many offers and transactions yet.

“The boost in activity is more in the early stages, rather than people running in with offers everywhere.”

“Auctions are getting a reasonable amount of activity, but in most cases there’s not a huge group of competing bidders. That’s good if you’re looking to buy because it means you don’t have to condition yourself to the reality that you’re unlikely to get the home you’re bidding on.”

WHAT ARE AGENTS SEEING ON THE FRONTLINE?

Johnny Sinclair, Bayleys National Director of Residential agrees that supply numbers are up and says that activity is too.

“Open home numbers have increased, there seems to be more buyers out there, and we're definitely getting more pen to paper.”

“However, the clearance rate doesn't reflect how much the market has increased by, and really what it boils down to is that vendors are now suspecting that their property is worth more than what the market is prepared to pay for it.”

Sinclair says when interest rates fell quickly during covid, house prices shot up, but this time around it’s a different story because there’s so many properties on the market already and many people are still stuck on higher interest rates.

“I see this time as the calm before the storm. We must remember that a lot of people are on interest rates above 6.5%, and they don't fall off those until well into 2025.”

“The second half of next year is when we're more likely to see more buyer competition. When we will likely see multiple buyers turning up and competing for the same bit of stock. That will be when we’ll see an increase in value.”

But until then, Sinclair says it is important vendors temper their expectations when it comes to price - especially over the next six months.

“If someone has offered to pay a million dollars for your house today, and you do another auction campaign in June or July, it's still going to be worth a million dollars.”

So, if you meet the market there are benefits for both buyers and sellers.

“If you’ve got the means to buy right now, there is no better time. In the same breath as a vendor, if you're willing to price well then you can be certain that your property will sell.”

WHAT REGIONS HAVE BEEN THE BUSIEST?

Sinclair says most of the activity has been happening outside of Auckland.

“I put that down to the fact that there were probably the biggest gains in the Auckland market, and therefore there's a bit more of a correction taking place.”

“I think the activity will pick up across Auckland in 2025, but there has definitely been a lag.”