The Reserve Bank of Australia’s decision to cut the interest rate by 0.25 of a percentage point to 4.1 per cent will put a floor under house prices in the country’s two biggest housing markets, but is unlikely to spark a surge in prices, economists and property analysts say.

Paul Bloxham, HSBC’s chief economist, said the RBA’s hawkish cut would start to stabilise house prices in Sydney and Melbourne, which have been falling for four months and 10 months respectively.