The maths is on the side of buying rather than renting, as a result of the Reserve Bank's decision to cut the official cash rate to 1.5 per cent.

Colliers International's national director of residential project marketing, Peter Evans, sees first home buyers as the biggest beneficiaries of interest rates going down - if they can get that 20 percent deposit saved, that is.

"When you're buying property, interest rates are the most critical thing. If you can't afford them, then whatever the market cycle is doing, it doesn't matter," says Evans.

"[Interest rates] will be low for the next five years, may go as low as 3.5 percent, and we look at more developers bringing on more Kiwibuild product. Buying off the plan gives people 12 months more time to build up their savings."

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Evans recognises that saving a $130,000 to make the deposit on $650,000 price point is not easy, but says the efforts by both governments to curtail the speculation by investors succeeded in flattening out the market, opening opportunities for first home-buyers.

He points to sales volume moving best in the lowest priced property in any suburb, but suggests that with lower interest rates, paired with no capital gains tax and a return to growth in migration that we are seeing "the first light of reversal".

He also sees developers (and their bankers) prepared to bring projects forward for Kiwibuild projects underwritten by the government, even as they take a hit on their margins to meet the $650,000 (for three bedrooms) or $600,000 price points, meaning supply will be there for buyers.

"The bottom of the cycle might not be next year, but will be by 2020. At that point the market has been off for four years - it bottomed in 2016 when sales volume dropped, even though it took 18 months to register on prices.

"All the stars are aligning, as supply has to come first and then we'll see the increase of sales volume come through," Evans says. "It will get young people out of the rental trap, and it's much nicer to be in control of your own destiny."

OneRoof.co.nz editor Owen Vaughan says: "Rewind to last year, and the mood was that rates would go up. The cut is good news for first home-buyers and those who are in a position to renegotiate their mortgage.

"And with CGT now off the table, the Reserve's move may spark more activity in the investor market, which had been subdued."

The Reserve Bank would not be keen to see house prices soaring again - but has weighted the balance of risk towards the other end of the economy.

Previously it has used its regulatory powers to introduce restrictions on bank lending (LVRs) to cool the market.

As part of its financial stability brief, the RBNZ monitors New Zealand's private debt levels closely and has regularly cited them as cause for concern.

The rate of growth in mortgage debt has slowed in the past two years but remains at relatively high levels by global standards.

In its decision, the Reserve Bank cited concerns about slowing global growth and the domestic economy.

It noted that inflation was still subdued and that despite low unemployment there was some slack in the job market.

"The Monetary Policy Committee decided a lower OCR is necessary to support the outlook for employment and inflation consistent with its policy remit," the newly minted committee - which includes three external members - said in the statement.

It said the lower OCR provided a more balanced outlook for interest rates, without indicating whether further cuts were needed.


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