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Two OCR hikes are on the cards. Here's what nobody can predict yet

OCR rises are expected in October and December. Brad Olsen explains why 2027 is the bigger unknown for property.

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Economists, including Infometrics' Brad Olsen, now expect two more Official Cash Rate (OCR) hikes this year, likely in October and December. This could bring the OCR to between 3% and 3.25% by year-end.

While these increases are widely anticipated, the real uncertainty lies in 2027. Key factors like economic recovery and population growth will influence the Reserve Bank's future decisions and the direction of the property market, so this is the space to watch.

The Official Cash Rate (OCR) is currently 2.75%, after rises in July and September. The Reserve Bank's next decision is on Wednesday 28 October, just before New Zealanders head to the polls, and the final one for the year follows on Wednesday 9 December.

You might expect a lot of nervousness about what that means for the property market. According to Infometrics Principal Economist Brad Olsen, most people already know where things are heading.

"I expect a lot of people in the market, from financial market traders to households, have a pretty clear idea of where things are going," he says. "They're going up, and that's not a surprise to anyone."

Why an October rise now looks likely

Only a few weeks ago, economists were split on whether the Reserve Bank would lift rates in October or hold off until December. December looked the more likely of the two.

That changed quickly. "Since then, we've had massive surges in oil prices and a lot of pressure coming through the system," Brad says. Many forecasters, Infometrics included, now expect a rise at both the October and December decisions.

Election timing won't sway the Reserve Bank

Some people have asked whether the Reserve Bank can move rates right before an election without getting tangled up in politics. Brad isn't worried about that.

"The Reserve Bank couldn't care less. They'll do what they need to do, regardless of the day of the week or the electoral cycle."

The real unknown: what comes after December

Brad expects the OCR to finish the year between 3% and 3.25%, and says forecasters broadly agree on that. The open question is what happens after that.

"Over summer, what additional information do we get? How does the Reserve Bank feel coming into 2027? Do they think they've got more to do, or can they wait it out a bit and see how economic trends emerge?"

"No one's quite sure how much further, if any, they might need to go," he says.

What it means for buyers and sellers

The outlook for property in 2027 depends on factors that are hard to predict right now. Brad points to two in particular: whether the economy recovers more strongly, and whether population growth picks up enough to boost sales activity.

"All of those things are quite volatile and hard to pick at the moment," he says.

For anyone planning to buy, sell or refinance, Brad's message is that higher rates over the next couple of months are expected. The direction for next year is the part to keep an eye on over summer.

Author

Charlotte Rosier

Charlotte is a Communications, PR and Content expert, who believes every home has a story to tell. She loves spaces that break the mould and brim with personality, with a particular weakness for art deco.