Potential rate cut will boost commodity-driven Perth market: Raine & Horne

According to the chief executive of real estate agency Raine & Horne, a drop in interest rates would likely boost the performance of Perth's housing market.

In the agency's end of 2014 wrap, Angus Raine said: "The Perth market is highly correlated to the commodities sector, so any assistance from the Reserve Bank will help underpin real estate activity in 2015."

Raine & Horne Rockingham Beach principal Paul Curran said the prospect of a rate change would particularly affect the south-western suburbs.

"Interest rate cuts will always make a difference in first home owner belt suburbs such as Rockingham, Safety Bay, Baldivis and Warnbro, where it's possible to secure a four bedroom, two bathroom home for between $380,000 and $450,000," said Curran.

In the city's northern region, the Rain & Horne North Perth Principal Larry Gallagher said exposure to commodity prices has weakened conditions in the investment property market.

"However, there is cause for optimism with the falling Australian dollar sure to help attract more foreign interest in the Perth real estate market," Gallagher said.

"The falling dollar might also keep more Australians at home this Christmas holiday season, with Western Australia sure to be a major beneficiary. A spike in tourism numbers often translates to more interstate investors buying Perth real estate."

Meanwhile, the agency claims increased calls to review negative gearing policy have impacted interest in the investor-dominated Mandurah market. Petter Vetten, principal at Raine & Horne Mandurah, called "ongoing attacks on negative gearing" "far from helpful".

"The Mandurah market was going gangbusters up until about three weeks ago when the calls for the government to review negative gearing hit a crescendo," said Vetten.

"Investor enquiries have since hit the wall following last week's release of the Financial System Inquiry Report, which recommended reducing the benefits of negative gearing."

However, he believes a potential rate cut could encourage more first time bud