The cut in the official interest rate by 25 basis points to 2.75 per cent should help boost investment in commercial real estate, as long as banks pass on the full amount, property specialists say.
Interest rate-sensitive real estate investment trusts, such as retail landlords Westfield and GPT Group, will be major beneficiaries of Tuesday's cut.
Research director for Colliers International Mark Courtney said the rate had the potential to benefit the property market but only if the banks passed it on.
"It would be great news for the property industry. Another 25 basis points off the mortgage variable rate and that becomes interesting," he said.
GPT Group chief executive Michael Cameron said: "This is a welcome decision and will give an important boost to consumer confidence.
"The rate cut will help to offset what is shaping to be a tough federal budget for households," he said.
Stockland, Mirvac, Lend Lease and Australand are the biggest listed residential developers in the country and have been calling for lower rates to stimulate the flagging construction sector.
In the latest data, the national construction sector hit a seven-month low in April as conditions continued to deteriorate.
The latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index was down 3.8 points at 35.2 in the month. (Readings below 50 indicate a contraction in the industry, with the distance from 50 indicative of the strength of the decline.)
But the positive for developers is that Jones Lang LaSalle's latest report shows Sydney has the oldest office stock profile in Australia, with almost half the CBD office stock older than 30 years.
The 284,000 square metre commercial development at Barangaroo has the capacity to meet only 50 per cent of the projected demand over the next 10 years.