OCR & interest rates

Gerald Mullaney

15 May 2025

Pay day due for the observant investor

The OCR is due for another review on the 28 May 2025 and it is of the view it will be reduced by 00.25 basis points, down to 3.25%

The RBNZ indicated in Jan 2025 that the OCR range is between 2.50% and 3.50% range.

That would indicate that RBANK NZ is treading very slowing to guage what OCR will trigger econonic growth but not causing inflation.

Currently the OCR is in the top of the range, that range being 2.50% to 3.50% on the 28 May 2025 the OCR is forecast to be 3.25% one has to wait and see if the OCR does reach a low 2.50% OCR or lower maybe reached. That could mean some rates going to as low as 3.00 to 4.50% we are already in may 2025 seeing one to two years rates at 4.99% which is 5.00% in reality.

Banks are advertising 4.99% for one to two years as at 15 May 2025 this may not be a great rate in three to four months time when they could be in the rage 3.50 to 3.99% thereabouts.

Holding out will bring about a great payday keep alert.

A rolling stone gathers no moss

Gerald Mullaney

15 May 2025

In this issue, the view is discussed on how long it takes, on average, to make a profit, in selling residential housing properties.

The answer is quite clear, the longer one holds a property the more likely one is to make a profit.

The main view is that it takes approximately 10 years to make a decent profit, that works out at about 7% per year, on the gross value of the residential property. Some types of property, might be less, mid to top end properties might be more depending on the cycle and or market that one sells into.

There are, of course, when some residential property owners can and do make profit in the one to five year range by adding value.

Usually when interest rates are high residential real estate property is harder to sell and the prices may drop.

Therefore in summary a good time to sell is when interest rates are low, there may be a better chance, to make a profit after 10 years give or take.

Anytime, can be a could time to buy or sell, depending if one can secure a great buy or buy a property up to 30% below its value.

In 2025 14% of sellers are losing money this is because they have only held for 2 to 3 years. NZ has relativley high interest rates plus a recession in 2025 this comination makes it harder to sell for a profit.

The time to sell and make a profit is a lot harder in 2025, however mid 2026 if one is thinking of selling mid 2026 may be a good time depending on interest rates and recession and if one had held the property for up to 10 years.

Look for low interest rates and a boyant economy as a sign its time to sell and put one profits in the bank in rediness for another great buy.

One recent view is that properties may not double in the future pasted 2025 has they have done over 10 years it could take the next ten years for residential property to come down to a reasonable affordable price.

In the long run the view is never sell property hold and buy enough investment properties to sustain you in retirement.