An economist says the Reserve Bank official cash rate drop won't stimulate more borrowing or house buying and selling.
Shamubeel Eaqub said the cost of money was not the big issue and no OCR change could compensate for what's about to happen to the housing market.
"The question is, will banks lend and are people still willing to borrow?" he asked, citing predictions of a sharp business downturn, the possibility of widespread job losses and financial insecurity.
The Reserve Bank announcing today it has slashed the Official Cash Rate from 1 per cent to a new record low of 0.25 per cent.
But that didn't spark joy for Eaqub who is forecasting New Zealand's worst economic and confidence shock: "We're looking at the deepest and longest recession ever. This is worse than the global financial crisis."
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"This is unprecedented. We can't predict how the virus will spread, what steps countries will take or not take and the impact on our economy," he said when asked about how the housing market might be affected.
"Job losses, pessimism and difficulty getting debt will reduce buyer demand. Sellers will hold off unless they have to sell - moving for a job, family breakups, financial distress.
The biggest unknown is the credit channel - what will banks do?"
He forecast a very localised impact, saying regions which rely heavily and export and incomes "will experience a vast shock. And of course, the priority for everyone should be to minimise the spread of the virus. We do not want the tragedy unfolding in Italy. Buying and selling houses can and should wait."
But at least one real estate agent remains upbeat and welcomed the OCR drop. Derryn Mayne, Century 21 New Zealand owner, said the cut would help carry the momentum we've seen return to the property market in recent months.
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Online mortgage calculators would soon be working overtime, she believes.
"More first-time buyers will inevitably enter the market, and existing home buyers will consider the forecast low borrowing costs a good opportunity to take their next step on a bigger or better property," she said.
Housing demand continues to be strong, sales volumes and prices are generally up, Auckland is rallying, rents from Westport to Wellington at all-time highs and now interest rates are set to stay rock bottom, Mayne said.
Kiri Barfoot, a director of Auckland-headquartered Barfoot & Thompson, said last week auction rooms remained filled and the market busy.
Asked if that agency had noticed any changes, she said: "Nothing yet. Sales are up, auction clearance rates up, multi offers up etc so our answer as we see it is no."
Significant new data on the market won't now emerge till early next month, when Barfoot & Thompson issues its Auckland and Northland numbers for March.
Quotable Value will issue national house sale values and sales volumes during March around the same time.
It won't be till towards the middle of April that the Real Estate Institute publishes its monthly median and average sales prices for March, as well as volumes sold and length of time to sell.