Mona Vale Blog

How Expected Rate Cuts Could Impact the Housing Market – Insights from CoreLogic

Interest rate reductions have historically had a significant impact on the Australian property market, and if past trends continue, certain areas are better positioned to benefit than others. Drawing on insights from CoreLogic, this article explores how expected rate cuts could influence property values across the country, with a particular focus on Sydney’s Northern Beaches real estate market.

How Much Could Home Prices Increase?

CoreLogic’s research suggests that for every 1% drop in the cash rate, national dwelling values could increase by an average of 6.1%. However, not all markets respond equally—historical trends indicate that more expensive markets tend to experience the strongest price surges when interest rates decline - Based on previous examples from Corelogic.

High-End Markets Set to Benefit Most

Luxury markets in Sydney and Melbourne have historically shown the greatest response to interest rate cuts. A prime example is Leichhardt, where a 1% drop in interest rates has historically resulted in a 19% increase in house values. Similarly, unit markets with high price points and strong investor activity, particularly in Sydney, Melbourne, Hobart, and Canberra, have also demonstrated significant growth in response to past rate reductions.

Northern Beaches Real Estate and Rate Cuts

The Northern Beaches property market, known for its premium coastal homes and strong buyer demand, is well-positioned to benefit from lower interest rates. With high-end homes in suburbs from Manly to Palm Beach already in demand, an interest rate cut could further boost property values as buyers gain greater borrowing capacity.

For sellers on the Northern Beaches, this could mean increased competition and stronger sale prices. For buyers, lower rates could open up opportunities to secure a dream home in a highly sought-after location.

Brisbane, Adelaide, and Perth: Varying Responses

In Brisbane, past rate reductions have generally benefited the more expensive suburbs, with the exception of Browns Plains. Many of the top-performing house markets in Brisbane had median values exceeding $1 million.

Adelaide and Perth, however, have shown a weaker correlation between rate cuts and price growth. In Perth, property values have historically been more influenced by the mining sector rather than interest rates, while Adelaide saw steady, long-term price growth before a sharp rise during the COVID period.

What This Means for Buyers and Sellers

A potential rate cut in 2025 could significantly impact the Australian housing market, particularly in high-value areas such as Sydney’s Northern Beaches. Buyers may find that lower rates improve affordability, increasing competition for premium properties. For sellers, now could be an excellent time to prepare for a potential market upswing, ensuring they maximize their sale price when conditions become more favorable.

Final Thoughts

Looking at past trends, the biggest beneficiaries of a cash rate cut are likely to be higher-end markets in Sydney and Melbourne, including premium coastal areas like the Northern Beaches. While other markets across Brisbane, Adelaide, and Perth will also see shifts, the impact may be more varied depending on local economic factors.

If you’re considering buying or selling on the Northern Beaches, staying informed about interest rate trends and market movements is crucial. To learn more about how these changes could affect your property decisions, reach out to our team of local real estate experts today on 02 9999 0800.

(This article is based on insights from CoreLogic and is intended for informational purposes only.)