Today’s decision by the Reserve Bank (RBNZ) to keep the official cash rate (OCR) at 0.25% came as no surprise. The expansion of its asset purchase programme from $33bn to $60bn was also widely picked in advance by economic commentators, and is another welcome move by the RBNZ, as it steps up yet again to support the economy through this recession.

In terms of the residential property market implications, it’s hard to see either fiscal or monetary policy being enough to entirely prevent declines in sales volumes or property values. Our working assumption is that sales activity falls as much as 25% this year and that prices will have shown declines by the end of 2020 too.

However, today’s announcement by the RBNZ will still benefit the property market indirectly by helping to keep interest rates across the economy low and diverting some cash out of savings and into other assets (such as housing). We’ve already seen some mortgage rate offers go below 3% and there are plenty of anecdotes about investors keen to continue buying property as they hunt for a better yield than money in the bank.

More falls in mortgage rates can’t be ruled out either, given that the RBNZ today also signalled the possibility of further cuts to the OCR next year, and subtly suggested that the trading banks should be passing on any falls in financing costs to borrowers.

Other silver linings at present include the fact that alert level two is set to kick in tonight and there’s also a strong probability of more government spending to be announced in tomorrow’s Budget. There’s no denying that the property market outlook is subdued, but it’s not all doom and gloom.