The ABS measure of house prices confirmed a 1.0% fall in the December quarter, making it four straight quarterly declines.  According to the ABS, house prices peaked in the June quarter 2010 and since then have fallen 5.5%.  In real terms, this is a fall approaching 10%.

The data fit broadly with the RPData series which has the advantage of being very timely, but the disadvantage of being choppy from month to month (much like the monthly inflation data versus the quarter consumer price index).

Either way, there is no doubt that the housing market is weak.  With consumer sentiment also weak (could be some auto-correlation in that link) and mortgage rates still some way from being “easy”, house prices are likely to remain in the doldrums a little longer or at least until more interest rate cuts come through.
 
The critical point in all of this is that house prices are unlikely to fall too much more – maybe another 5% or so – at most.  This is because of the massive bias towards floating rate mortgages and the common sense from the RBA in moving rates to an accommodative stance.  House prices are likely to bottom out during 2012 at which time new construction activity should also be on the rise.