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Speaker 1: Being.

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Speaker 2: Today's OCR announcement has got us all thinking about what

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Speaker 2: impact it's going to have on the housing market. The

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Speaker 2: RB and Z cut for the second time fifty basis points,

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Speaker 2: this time around from five point twenty five to four

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Speaker 2: point seventy five. So when can we start to see

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Speaker 2: this flow on to home loans and the housing market

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Speaker 2: at large. Core Logic's chief property economist, Calvin Davidson is

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Speaker 2: with us this evening ten arquare good evening, good evening,

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Speaker 2: big win.

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Speaker 1: Well it is. Yeah, if you're a mortgage biro, it's

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Speaker 1: certainly a big one. We're going to see mortgage or

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Speaker 1: ats fall further. I whan they've already been decline, but

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Speaker 1: probably further falls from here. So I think I direct

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Speaker 1: boast housing sentiments and probably a boast of house prices

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Speaker 1: in terms of bringing the recent downturned to an end. Yeah.

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Speaker 2: I'll ask about house prices in a second, because obviously

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Speaker 2: that's one of the flow on effects from this. But

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Speaker 2: how are you expecting the banks to react? Already we've

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Speaker 2: seen a fair bit of action today. Are they going

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Speaker 2: to be trying to outdo each other in the coming weeks?

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Speaker 1: Yeah? Well, I think what we're really saying in the

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Speaker 1: housing market at the moment is it's fairly quiet. We're

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Speaker 1: not seeing many sales. It's quite quiet in terms of activity,

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Speaker 1: so banks are competing for that market share. It's about

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Speaker 1: trying to win market sharing relatively quiet market. So yeah,

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Speaker 1: I think we'll see some fairly good rates coming through

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Speaker 1: as those banks trying to win those customers. So I

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Speaker 1: think if you've got quite a mortgage, there's a good

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Speaker 1: news head.

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Speaker 2: Yeah, Calvin, there's a lot of debate over where the

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Speaker 2: neutral cash rate should be. But if next week's CPI

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Speaker 2: data shows that inflation New Zealand inflation in New Zealand

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Speaker 2: is within the target band and somewhere nearer to two

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Speaker 2: percent than three percent, is there an on an argument

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Speaker 2: that perhaps the OCI should be cut even further.

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Speaker 1: Yeah, well, that's possibly a narrative that's going to start

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Speaker 1: coming through because the neutral rate is demanded to be

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Speaker 1: about three percent. It's definitely not a precise science, but

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Speaker 1: if it is somewhere around there and where we're still

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Speaker 1: currently at four point seventy five, then I think there

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Speaker 1: is an argument to say you try and get there

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Speaker 1: as quick as possible, especially if inflation is coming down

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Speaker 1: quickly and perhaps roving the rescue of it even going below.

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Speaker 1: So that could be a bit of commentary that starts

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Speaker 1: coming out. But also I guess the Reserve Bank just

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Speaker 1: want to observe the days. You're going to give these

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Speaker 1: things time to book their way through, so I'd anticipate

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Speaker 1: the steady path. But that argument might start just.

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Speaker 2: How much pent up demand is there in the property market.

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Speaker 1: There's probably a little bit. I mean, certainly from existing

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Speaker 1: in occupiers. We haven't seen a lot of people moving

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Speaker 1: around lately. There's been a lot of activity from first

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Speaker 1: time buyers, but existing in occupiers have been but quieter

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Speaker 1: the normal, and also investors have been a bit quieter

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Speaker 1: than normal. So as interest rates for finance and conditions

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Speaker 1: get a bit easier, we could start to see them

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Speaker 1: coming back out of woodwork, and I think investors will

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Speaker 1: certainly be an interesting story in twenty twenty five, there's

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Speaker 1: mortgage rates come down and prits those rental fields improvement,

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Speaker 1: but top ups to keep these properties going shrink and

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Speaker 1: they could start to become a bit more interested again.

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Speaker 2: Yeah, to talk to us about that a bit more.

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Speaker 2: How much more activity do you think we're going to

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Speaker 2: see from investors, or where does the see our need

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Speaker 2: to be before investors start getting really interested.

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Speaker 1: The level will differ depending on each individual investor how

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Speaker 1: much equally they have that sort of thing. But certainly,

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Speaker 1: if the our CR keeps falling, where we see it

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Speaker 1: fall towards that three percent, forget in approaps the next

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Speaker 1: year or so, you can easily see mortgage rates down

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Speaker 1: towards the five five and a half percent range, which

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Speaker 1: I think is probably where things would start to get

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Speaker 1: a lot more interesting for investors. Now. On the other hand,

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Speaker 1: we've also got lending rules in place there, and in

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Speaker 1: particular the debt to income ratio caps and faster mortgage

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Speaker 1: rates fall, the sooner those DT eyes will kick in,

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Speaker 1: which will tend to work in the other direction, and

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Speaker 1: they are they're range at the entire property market, but

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Speaker 1: I think it probably will be investors who will feel

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Speaker 1: DT eyes a bit more. So it's go a interesting

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Speaker 1: year for investors. Low mortgage rates help, but at the

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Speaker 1: same time DT eyes might push in the other direction.

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Speaker 2: Yeah right, Yeah, you kind of got two competing forces there,

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Speaker 2: the accelerator and the brake pedal being hit at once.

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Speaker 2: So what are you expecting in terms of house prizes

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Speaker 2: over the next week period.

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Speaker 1: Well, I think what we've seen over the past five

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Speaker 1: or six months is that prices have been falling. I

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Speaker 1: suspect that could end pretty soon because we're seeing a

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Speaker 1: sentiment boost already from lower and morgitrates, not to mention

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Speaker 1: the direct impact on finances. So I think this little

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Speaker 1: downturn will probably end pretty soon, but not necessarily sure

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Speaker 1: that turns into a major upturn either, because of course

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Speaker 1: jobs are being lost, so we can labor market certainly

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Speaker 1: is a challenge for the house of market. There's still

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Speaker 1: a lot of listings out there, so buyers do have

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Speaker 1: the pricing power, and then of course the debt to

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Speaker 1: incumb ratio restrictions kicking in as morgaitrates fall, So I

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Speaker 1: think preps the downturn ends, but also not necessarily an

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Speaker 1: upturn starting straight away either. So I fairly feel sort

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Speaker 1: of quiet tow our eighteen months.

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Speaker 2: Yeah. Right, when we look at the RB and Z

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Speaker 2: commentary from today, I mean, only so much you can

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Speaker 2: read into for a November cup. Given November then goes

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Speaker 2: into what is almost three months before their next decision.

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Speaker 2: Where do you think we are sitting in terms of

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Speaker 2: the Reserve Bank's next move.

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Speaker 1: Yeah. I think if the data involves as we think it, well,

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Speaker 1: if we still see some weakness out of there the economy,

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Speaker 1: we see inflation playing ball and behaving nicely and continuing

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Speaker 1: to Ford, and I think you have to be looking

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Speaker 1: at another point. Five percent cut in November gives that

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Speaker 1: sort of relief over that Christmas period and they come

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Speaker 1: back and assess in the new year. So you're probably

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Speaker 1: looking at another point fok sink cup, provided the data

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Speaker 1: goes to plan.

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Speaker 2: All right, Calvin, appreciate it. Thank you. Calvin Davidson is

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Speaker 2: core Logic's chief property economist. Thirteen past six. For more

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