RBA interest rates: CoreLogic reveals the suburbs set to benefit from today’s rate cut

The cut in official interest rates has finally given you the confidence you need to start shopping around for a new home. But be warned, not every suburb will suddenly be a buyer’s paradise.

While lower rates generally mean buyers can borrow and spend more — which tends to boost property prices — property analysts CoreLogic expects only some markets will be affected.

The company’s head of research Eliza Owen said a huge surge in property prices in recent years had meant that most suburbs had already hit their peak — reducing the impact of an interest rate cut.

She expects an average 6.1 per cent jump in property value for each one percentage point decline in the cash rate, while noting relatively expensive markets had historically shown stronger responses to reduced cash rate settings.

A reduction in the cash rate could also spur a recovery trend in the high end of the Sydney and Melbourne housing market, which tend to be the bellwether for broader market recoveries in those cities.

In the current economic climate, lower rates should go a long way in boosting consumer confidence, she said.

Sydney and Melbourne

Sydney and Melbourne houses and units stand to be the big winners from a reduction in interest rates.

In Leichardt, historically a one per cent reduction in interest rates has delivered a 19 per cent increase in house values.

“Unit markets with the biggest response to rate falls have a high price point, a high concentration of investment ownership, or both,” Ms Owen said.

“In Sydney, Melbourne, Hobart and Canberra, many of the markets with a solid response to rate reductions are also seeing values well below their peak under recent interest rate rises, so easier access to credit may trigger a recovery trend in these markets.”

Those suburbs in Sydney include: Sutherland, Menai and Heathcote; Warringah; Huntsville; Hornsby; Eastern suburbs south; Parramatta; the inner city; Botany and Caterbury.

In Melbourne, it’s: Whitehorse - West; Essendon; Manningham - West; Boroondara; Bayside; Yarra; Glen Eira; Whitehorse - East; Monash and Stonnington - East.

Brisbane

“The Brisbane markets that have historically had the strongest reaction to a reduction in interest rates are also relatively expensive,” Ms Owen said/

“With the exception of Browns Plains, each of the top 10 house markets had a median house value of at least $1 million.”

The suburbs set to benefit are: Sunnybank; Nathan; Brisbane Inner - North; Mt Gravatt; Brisbane Inner - West; Chermside; Browns Plains; Brisbane Inner - East; Capalaba and Carindale.