Tomorrow morning, RPData will release its house price data for May which will show a substantial fall of about 1.9 per cent in house prices in the month. This fall is based on the already published data in the five main Australian cities – the data from other cities may add or subtract a tenth or two from this result.

As noted here previously and elsewhere, it is not clear whether this price fall is just a seasonal blip, some noise in the data or some other influence and that the general uptrend in prices of the past two years is being sustained.

Be that as it may, get set for some alarmist news reports on house prices falling sharply. Nothing sells like bad news and a near 2 per cent monthly drop in house prices (“a record fall!”) will likely get the attention of the media.

If the fall is just seasonal, the next month or two must show some stabilisation in the house price series. This remains more likely than not given the still record low level of interest rates, the banking sector’s relaxation of lending standards and the strong desire of many high income earners to use negative gearing and the tax system to have low income earners subsidise their borrowing costs through negative gearing.

Positive demand factors from strong population growth are also likely to support prices, at least in the near term.

One issue, which would be a concern, is if the dip in house prices in May is not just a blip and is in fact the start of something more sinister. Again, this seems unlikely but most market turmoil begins with a trickle of less favourable news that in time turns into a flood of pain.