It’s hard to believe we are at the end of February already. We hope the year has started well for you all.
Since our last newsletter the expected further drop in the OCR has been activated. The OCR is now at 2.25% and appears to be adding stimulus to the economy. January spending data showed a higher than forecast lift in discretionary spending. Long term interest rates have started to rise, indicating that we may already be at the bottom of the interest rate cycle and commentary from economists seems to be that we may start to see a rise in the OCR as soon as Q4 2026. Of note is that approximately two-thirds of kiwis will be coming of fixed term mortgages in 2026, the bulk of which will be on to lower rates. Hopefully it will provide further stimulus still.
The Geopolitical landscape is still uncertain with hot spots still in the Ukraine, and now the Middle East and Central America. The US tariff regime is also under serious pressure with the ruling last week from their Supreme Court. Watch this space but it can only be positive for NZ Inc. The weaker currency also adds fuel to the fire assisting exporters and bolstering tourism. As we go to print the NZ/Aus cross rate is at the lowest level in 14 years. The Waikato continues to thrive. New Zealand’s fastest growing city three years running, we are buoyed by the completion or commencement of significant new projects. The BNZ Waikato Regional theatre is now completed, and shows have been running since late January. This is a real long-term asset for the city and there is also a new hospitality offering that is being well patronized. Confirmation of the new GP Medical School at the University of Waikato is another significant project we can all be proud of.
On the Commercial Real Estate front leasing activity has not improved noticeably. Demand remains weak and listings are still coming on thick and fast. Stock available For Sale has also increased noticeably too. While we had a flurry of sales activity in Q4 2025 the sense is that those now looking to purchase are leveraged buyers. When purchasers look at projected yields and the cost of commercial lending it would appear as though the returns are not where purchasers need them to be. We are still also seeing good inquiry from owner-occupiers. This highlights the importance for Vendors to support good promotional activity and favour non-priced campaigns (auction or tender) instead of listings that are above the perceived market value.
Residential activity is up around 15% when we compare 2025 numbers to those transacted in 2024. While the median price has effectively stayed the same, the number is a bit misleading given our largest buyer group was first home buyers, followed by investors, both operating at the lower end of the price spectrum. Movers, the group that often has to move out of necessity (schools, upsize/downsize etc.) have largely been absent from the market. The expectation is that group will return in earnest when the economy improves, given the direct correlations between sales volume and GDP. Commercial real estate should follow suit.
If we can assist with Commercial Leasing and Sales, Body Corporate or now Commercial Property Management needs then please reach out to your preferred agent.