Well, our first Official Cash Rate (OCR) announcement of the year has come and gone with little fanfare.
The new Governor played it straight on 18 February—delivering a no-change verdict (keeping the OCR at 2.25%), and accompanying commentary that left little room for misinterpretation.
Bit of a yawn to work through, but the key takeaways from the OCR announcement were as follows:
- Unemployment is still higher than we’d like, at 5.4%, meaning spare capacity in the economy.
- A slow recovery seems to be underway, with GDP at 1.1% in the September 2025 quarter, up from -1.0% in the June 2025 quarter.
- Side note: how long does it take to get this data together? Seriously. The US publishes GDP stats four weeks after quarter-end (and on a much larger scale).
- As is usually the case, our agri sector is carrying us through these tough economic times—although we don’t hear too much about it as it’s not a particularly sexy story.
- Paying down debt has been the priority for farmers this time round—i.e. they’re skipping the new 4x4 in favour of keeping the bank happy—which means we’re not yet getting the positive trickle-down effect through the rest of the economy.
- Inflation, inflation, inflation…. With annual inflation at 3.1% for the December quarter, we’re sitting just outside the RBNZ’s 1-3% target band—but it’s predicted to return to the midpoint over the next 12 months.
- I have my doubts, though, given that business surveys show intent to raise prices this year to build profitability and margins. Of course, you also need customers to be willing to meet the market and spend more—and, to be fair, similar surveys confirm it’s there. Time will tell.
Forecasting out to the rest of the year, we can likely expect at least one OCR hike in 2026, hopefully towards the end of the year—but all will be data dependent, as it should be.
Our cousins across the ditch haven’t fared quite so well—with Australia’s inflation data coming in at 4.2%.
That means its version of the OCR has increased, now sitting at 3.85%. How does a one-year rate at 6.09% sound?!?
Thankfully the two countries’ trajectories decoupled as a result of our differing responses to the pandemic, but I like to keep an eye on them, nonetheless. If New Zealand doesn’t get well and truly on top of inflation, our paths may start to become more closely aligned.
I don’t envy the RBNZ the decisions that lie ahead of it this year. It’s going to require a very careful balancing act—stimulate the economy by dropping the OCR and risk higher inflation, or go hard to bring inflation in line quickly, while hurting spending habits / GDP in the process.
I guess that’s why they’re paid the big bucks though.
So what about Wellington?
Well, it’s an election year, so that means lots of chat and promises made, with little action.
Traditionally, Wellington does well under a Labour Government, as the sector spending increases through job creation and opportunities. National is more inclined to head towards austerity measures, as we’ve seen over the last couple of years—but the big question is whether they’ve done enough to stay in power.
I tend to believe that New Zealanders always vote governments out rather than voting them in.
Things have got a bit more complicated in recent years, with the smaller parties making up coalition partners, but does this assist with decision making and running a country?
And the referendum for a four-year term has just been binned… reason why? Not enough time to do it justice!
Outlook on the Wellington property market
I think it’s likely to remain a buyer’s market this year, as there is still plenty of stock out there.
Inventory levels will only start to recalibrate once we’re seeing higher employment figures and migration to the capital.
Sales prices have largely stabilised, but time to sell is still meaningful – by the numbers as at Jan 2026 (thanks QV and REINZ):
- Average house value (House Price Index from QV) is $811,353 for Greater Wellington – a 0.2% favourable change from last quarter, but down 3.6% year-on-year.
- 63 days to sell in Jan 2026. 10 year average is 48 days as a benchmark.
- Median sale price is down 2.6% compared to Jan 2025, and down 4.6% from Dec 2025.
A recent article has called the housing ‘recovery’ (speaking from homeowners’ perspective obviously) a tale of two islands.
Wellington is still down 26.9% from (23.6% for Auckland), whereas the mighty West Coast, for example, has bounced back with an increase of 9.3% year-on-year.
Other areas south have followed a similar trajectory, clocking a circa 6% increase, and Canterbury at 3.4%—with migration and a bountiful agri sector possibly a contributing factor.
Personally, I think we need to be doing more to make the Capital an attractive destination for the Film and Game Development industries.
It’d need to be driven by Government, of course—but we’ve got Sir Pete here, along with James Cameron, so it should be a match made in heaven.
In fact, IT in general should be encouraged, along with migration and international students.
It used to be if you asked someone overseas what NZ was known for, the answer would be the Al Blacks. This is very much now Lord of the Rings, so we should be getting amongst it and taking advantage.
Anyway, that’s enough from me for this month. As always, feel free to reach out and shoot the breeze – always happy to help or shout a cold one.
About the author: Nick Virtue, Squirrel Mortgage Adviser - Wellington
Nick cut his teeth inside the big banks—racking up 15 years' experience across SME, franchise, health and large corporate clients—before taking the leap to become a mortgage adviser in 2020. As one of our resident Wellington home loan experts, Nick knows the Capital (and its housing market) like the back of his hand. Whether working with clients or chatting to media, he has a way of breaking down the complex world of mortgages into simple, easy-to-understand language.