WHEN WILL INTEREST RATES START TO FALL?

This seems to be the question on everyone's lips at the moment.   OneRoof recently reported...
 

Kiwibank chief economist Jarrod Kerr said buyers were right to feel optimistic. He is forecasting a cut to the OCR in November, and seven more successive cuts of 0.25 points next year.

“[Interest rates] will decline a little bit now and will decline a little bit further as the Reserve Bank cuts the OCR in November, but next year we will see some substantial declines in interest rates which will act as an accelerant for the housing market.”

Kerr said bank interest rates of 7% were restrictive and should be taken back to a more neutral setting of around 5%. “That’s a big move. They could do that quite quickly or they could take their time, depending on what inflation is doing.”

Kiwibank chief economist Jarrod Kerr says interest rate cuts will act as an accelerant for the housing market. 

Once interest rates dropped, he expected a surge in investor activity. “I think if there’s any group going to bounce back, it will be investors and then, of course, owner-occupiers upgrading. Confidence for all in the market will improve.”

Kerr expects house prices to creep back up again, and is forecasting rises of between 4% and 7% next year.