A man in a suit and glasses holds up a document while speaking at a podium labeled "Reserve Bank of New Zealand Te Pūtea Matua," with "THE BULLETIN" text on an orange banner to the left.
Reserve Bank governor Christian Hawkesby speaks at the media conference following the OCR announcement. (Photo: Mark Coote/Bloomberg via Getty Images)

The BulletinMay 29, 2025

OCR cut promises a mild boost for still-stagnant property market

Contributing writer
A man in a suit and glasses holds up a document while speaking at a podium labeled "Reserve Bank of New Zealand Te Pūtea Matua," with "THE BULLETIN" text on an orange banner to the left.
Reserve Bank governor Christian Hawkesby speaks at the media conference following the OCR announcement. (Photo: Mark Coote/Bloomberg via Getty Images)
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Economists saw it coming, banks moved early, and mortgage holders will feel the effects – but the OCR cut heralds only a housing bump at best, writes Catherine McGregor in today’s extract from The Bulletin.

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Called it

In a move that surprised no one but still carried significant implications, the Reserve Bank yesterday cut the Official Cash Rate (OCR) by 25 basis points to 3.25% – exactly what economists had widely predicted. The central bank’s monetary policy statement (MPS) struck a delicate balance: acknowledging economic recovery while noting persistent global uncertainties, especially from heightened US tariffs. Inflation is now within the 1-3% target band, and core price pressures continue to ease. Though one monetary policy committee member argued for holding the rate at 3.5% while the impact of Trump’s tariffs filtered through, five others voted to cut, citing “significant spare capacity” in the economy. The OCR is now at its lowest point since October 2022, marking a 225-point drop in nine months.

The RBNZ forecasts the OCR at 2.85% by the end of the year, implying at least one more cut, possibly two, before the year’s end, writes the Herald’s Liam Dann (paywalled). “Yet, countering that, Hawkesby said the committee currently had no clear bias as to what its next move will be in July. As the RBNZ has stressed many times in the past, these rate tracks are not forecasts it expects people should count on.” The MPS contained the word “uncertain” a whopping 164 times, Dann’s colleague Jenée Tibshraeny reports​ (paywalled).

Banks move fast, and mortgage relief is coming

Some banks didn’t wait for the official announcement. BNZ dropped mortgage rates on Tuesday, with Westpac, ANZ and ASB following soon after. Advertised special rates – for those with a below 80% LVR – are currently sitting between 4.95% and 4.99% for one and two-year terms, and 5.39-5.49% for six months.

These shifts matter: nearly half of all mortgages are due to be refixed in the June and September quarters, according to the MPS. That means hundreds of thousands of households will soon find themselves with more discretionary income – a boost not only for household budgets but also, potentially, for the wider economy. Finance minister Nicola Willis hailed the cut as good news for “local shops, local cafes” and hopeful first-home buyers alike.

Buyers return, but don’t expect fireworks

Predictably, real estate agents were quick to herald the cut as the signal buyers had been waiting for. LJ Hooker’s Campbell Dunoon told The Post (paywalled) it could “bolster buyer sentiment”, while Ray White economist Nerida Conisbee suggested lower borrowing costs would prompt renewed activity, especially for first-home buyers.

But independent economist Tony Alexander remains unconvinced. His latest surveys show weak buyer urgency and ongoing sluggishness in auction attendance. “It’s still a buyer’s market,” he writes in OneRoof, adding that while the OCR cut will help some buyers financially, its psychological effect is limited. “For now, the housing outlook remains one of high supply of new and existing properties and buyers feeling no need at all to hurry and make a purchase.”

Kelvin Davidson of Cotality (formerly CoreLogic) struck a similar note, forecasting only a “subdued upturn” in 2025. While the Reserve Bank expects home values to climb 3.5% this year and 4.8% in 2026, the housing rebound, if it arrives, will be modest. With high listings and little FOMO in sight, most experts expect vendors will need to blink first.

Landlords squeezed by poor returns

For residential property investors, the pain isn’t over. Even before this week’s cut, data shows only marginal improvements in yields and cash flow, Greg Ninness of Interest reports. National rental yields have ticked up slightly this year thanks to falling property prices and modest rent increases, but they’re still far from compelling. Once costs like rates, insurance and maintenance are factored in, many investment properties continue to run at a loss. That’s left landlords caught between “the rock of negative cash flow and the hard place of capital losses” if they were to sell, Ninness writes.

Alexander adds that tenants in strong financial positions are staying put – they’re getting good rental deals and see no urgency to buy. That’s understandable, he says, but “with few other buyers competing to acquire property currently, this remains a very good time to make a purchase” – if you’re confident you’ll still have a job in a year’s time, of course.

More reading from The Spinoff:

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Will any government be brave enough to blow up New Zealanders’ expectations of guaranteed super at 65? (Image: Getty)

The BulletinMay 28, 2025

Why messing with NZ Super remains political dynamite

Contributing writer
A red piggy bank with a fuse is about to be lit by a match held by a hand, suggesting financial danger or risk. A blue vertical banner on the left reads "The Bulletin.
Will any government be brave enough to blow up New Zealanders’ expectations of guaranteed super at 65? (Image: Getty)
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Universal super at 65 is increasingly unsustainable, but any attempt to change it will attract fierce political blowback. What’s a government to do, wonders Catherine McGregor in today’s extract from The Bulletin.

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No cuts to super – but everything else is on the table

Last week’s budget delivered a raft of cost-cutting measures, from halving the KiwiSaver member tax credit to tightening access to the Best Start payment. But superannuation was conspicuously untouched – a move that came as no surprise, given NZ First’s long-standing defence of the universal pension. High-income earners who can no longer access the KiwiSaver contribution remain fully entitled to super, a benefit projected to cost nearly $25 billion this year and rise to over $45 billion by 2037.

Critics have pounced on the apparent double standard, reports RNZ’s Susan Edmunds. As economist Shamubeel Eaqub put it: “It’s incoherent … incentives for Kiwis to save for their future [are] means-tested, but New Zealand Super, which is universal welfare for older people, is untouched.”

National’s slow path to raising the age

While ruling out means-testing, both prime minister Christopher Luxon and finance minister Nicola Willis have reiterated National’s plan to raise the super age – eventually. The party’s policy is to keep the current entitlement age of 65 until 2044, after which it will rise gradually to 67. No one born before 1979 would be affected.

In the NZ Herald (paywalled), Fran O’Sullivan argues that such a distant target is little more than political theatre. She contrasts Luxon’s timidity on the issue with former National PM Jim Bolger, who methodically raised the age from 60 to 65 over a nine-year period. O’Sullivan notes that Bolger “managed to convince New Zealanders that a gradual increase … was plain commonsense” at a time when life expectancy was increasing. By contrast, today’s leaders seem content to avoid political pain, she writes, even as super becomes an increasingly heavy burden on the budget.

One millennial’s wail of despair

The idea of delaying retirement might make sense on paper – but it’s enough to send some younger New Zealanders into an existential tailspin. Writing in The Spinoff this morning, Hayden Donnell delivers a howl of generational frustration: “Millennials have spent their formative years selling kidneys to pay rent on a draughty villa and getting bullied by gen Z for admittedly being huge losers. They’ll spend the next 20 helping fund their parents’ generation’s Mediterranean cruises. Surely after that they can have a break? I guess not.”

Donnell’s broader point is that policies like lifting the super age hit those with lower life expectancies and more physically demanding jobs hardest. And while life expectancy has barely moved in recent years – and is even declining in some countries – the financial squeeze on younger generations is intensifying, just as the likelihood of a guaranteed super at 65 starts to fade. Or, in other words: “Come on man how much shit can people under the age of 40 have shovelled onto them from a great height god damn it christ on a bike argh argh argh no.”

‘You can touch anything else. Do not touch my pension’

Two of New Zealand’s most prominent right-leaning commentators have also weighed in – and their take is not encouraging for National. In his Mike’s Minute, Mike Hosking warned that voters’ emotional attachment to super far outweighs any argument of fiscal prudence. “For many, superannuation is untouchable. It’s a lifetime’s worth of work. ‘I paid my taxes’ they say, even though that line isn’t actually real because we spent your taxes years ago and then borrowed a bit more to keep the lights on.”

Hosking’s Newstalk ZB colleague Heather du Plessis-Allan was even more emphatic: “Don’t touch my pension. You can touch anything else. Do not touch my pension.” Despite advocating for cuts to almost every other form of welfare, she drew a hard line at super, arguing that she and millions like her had earned it through years of tax contributions. “So, good luck to Chris Luxon getting this one across the line,” she wrote. With opposition like that from his own ideological camp, Luxon may find that even floating the idea of reform is as far as it goes.