The Aussies set to get $50,000 richer overnight: ‘Frenzy'

Yahoo

09-02-2025

Australian homeowners are expected to receive a hefty windfall when the Reserve Bank of Australia (RBA) starts cutting rates this year. For some lucky Aussies, property values could skyrocket by nearly 20 per cent in their suburb.
Melbourne-based buyer's advocate Emily Wallace told Yahoo Finance the forecast interest rate cuts could spark a 'frenzy of buying'. That's because while lower rates will give mortgage holders relief, they will also allow buyers to borrow more and spend more.
'I would suspect that as soon as interest rates do drop, I think that will spark more purchases in the market and unless it's got the stock levels to match it, we could actually see some really good results for sellers, because it could be high demand but low supply,' Wallace said.
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New CoreLogic research out today estimated property prices could increase by an average of 6.1 per cent for each 1 per cent drop in the cash rate, based on historical movements.
Both Commonwealth Bank and Westpac are forecasting four 0.25 per cent interest rate cuts this year, while NAB is predicting five throughout the cycle and ANZ just two.
For the average Australian property valued at $814,293, a 6.1 per cent boost would mean nearly $50,000 is added to property prices.CoreLogic head of research Eliza Owen said relatively expensive markets had historically seen bigger growth in response to lower interest rates, particularly houses.
'Key examples are houses in Leichhardt, Whitehorse and other inner markets of Sydney and Melbourne which have previously shown the strongest reaction to a reduction in the cash rate,' Owen said.
'These markets are also generally down from peak values, suggesting they have had a strong response to interest rate rises since May 2022.'
Leichardt in Sydney is expected to enjoy the biggest boost to house values, with prices historically rising 19.1 per cent from a 1 per cent cut.
This was followed by Sutherland, Menai and Heathcote with an expected 19 per cent gain, CoreLogic found, and Warringah with an 18.1 per cent rise.
In Melbourne, Whitehorse West was expected to enjoy a 18.4 per cent rise, followed by Essendon at 18 per cent and Manningham West at 17.4 per cent.
Sydney and Melbourne are expected to see the most gains, but Brisbane will also see a reaction in pricier areas.
Sunnybank values are expected to rise 5.2 per cent, followed by Nathan at 5.1 per cent and Brisbane's inner north at 4.9 per cent.
In contrast, CoreLogic found the relationship between the cash rate in Adelaide and Perth was less pronounced.
Here's a look at the top 5 suburbs in Sydney and Melbourne where house and unit prices are expected to benefit most from the cuts.
Houses
Leichhardt 19.1 per cent
Sutherland Menai Heathcote 19 per cent
Warringah 18.1 per cent
Hurstville 17.7 per cent
Hornsby 17.5 per cent
Units
Dural Wisemans Ferry 17.7 per cent
Chatswood Lane Cover 16.3 per cent
Campbelltown 16 per cent
Wollondilly 15.1 per cent
Rouse Hill McGraths Hill 13.1 per cent
Houses
Whitehorse West 18.4 per cent
Essendon 18 per cent
Manningham West 17.4 per cent
Boroondara 17.3 per cent
Bayside 16.4 per cent
Units
Glen Eira 12.3 per cent
Whitehorse West 10.6 per cent
Manningham East 9.8 per cent
Maroondah 9.1 per cent
Bayside 8.5 per cent