Source: Cotality
Wednesday 28 October 2026
Commentary by Chief Property Economist Kelvin Davidson
Today’s decision to keep the official cash rate unchanged at 2.75% wasn’t widely expected, but nor was it a clear-cut call either – with three of seven committee members voting to increase it; just outweighed by the four ‘holders’. Indeed, despite today’s hold, the commentary attached to the decision highlighted ongoing inflation risks and that “tighter monetary policy is likely to be required”.
Broadly speaking, the members who voted for a rate hold highlighted a general view that measures of inflation expectations remain ‘under control’ at least for now, and also that evidence suggesting firms are looking to increase margins and raise their selling prices remains fairly limited. Added to that, the economy isn’t yet firing on all cylinders either.
However, measures of core inflation have still lifted and the decision commentary actually noted that headline inflation is expected to accelerate back to 4.4% in Q4, from 3.7% in Q3. In the end, then, more OCR rises remain on the cards; it was just that the (slight) majority of members wanted to wait a bit longer before moving again. December 9th seems pretty likely now.
For the property market – provided that the economy can withstand all of the current uncertainty – we should see unemployment come down over the next year or so, which would tend to bolster sales activity and house prices. But there also seems to be scope for mortgage rates to rise further too , and the past 5-6 years have shown yet again that it’s credit availability and cost which tends to drive the housing market in the short to medium term.
As such, it seems unlikely that property sales activity or house prices are suddenly going to race away again anytime soon. It wouldn’t be a surprise to see more borrowers continue shifting towards longer-term fixed mortgage rates as insurance against even higher costs later.