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How much does a cash rate cut add to the value of a property?

By Craig Pontey

When you're after real estate in Double Bay, there's a particular kind of lifestyle you seek. A villa on the water with the wonderful views is the dream of many, and it's a type of property that can often only be found right here when you rent property in eastern suburbs. 

But beyond this, the premium that is paid for such real estate can also mean large-scale profits when you flip or sell a home down the line. You're playing with big margins, and deserve to get the right result on your bottom line when it's time to sell. 

With this in mind, the latest releases regarding the Reserve Bank of Australia's (RBA) cash rate cut will be music to the ears of many a property buyer. 

Rates go down, and values go up

According to Residential Property Manager (RPM), new research from Moody's Analytics indicates that every time the cash rate is cut by 0.25 basis points there is a direct impact on house prices, with a 0.5 per cent increase occurring. Given that there have been two cuts already this year, that suggests a 1 per cent rise across the board.

And in New South Wales, the increases could be even more pronounced – RPM reports our state is more affected by the cash rate cuts than other. Regular value and price growth aside, this is yet another boost for your real estate. For example, a $1million piece of real estate in Rushcutters Bay could have seen another $10,000 added to it's value this year just because of the RBA announcements, if Moody's is correct. 

According to 2011 census data, the majority of properties in the Double Bay region are units and apartments. This offers more affordable entry points into the market compared to detached houses, and could be what you need to kickstart the investment plan you deserve.

To find out more about making profit through property, get in touch with Ray White Double Bay. 

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