House prices are off the boil according to both the Australian Bureau of Statistics and RPData.

For the ABS, house prices rose just 1.5 per cent in the September quarter, with the annual rise of 9.1 per cent the lowest in a year and down from the 10.8 per cent peak in the March quarter 2014. With a very large 4.0 per cent increase dropping out of the annual data next quarter and given what we know about house prices so far in the December quarter, annual house price growth looks set to slip below 7 per cent when those data are released in 3 months.

The bottom line is that house prices are still rising, but not at a particularly alarming pace.

For the RPData house price series, which includes data up to and including today (I know the shortcomings of these daily data so don’t shout!), prices rose 1.0 per cent in October and by just 0.2 per cent in the first 11 days of November. Importantly, the annual rate of increase has decelerated from a peak around 11.5 per cent to now be 8.9 per cent. Indeed, in the last 30 weeks, the annualised increase in house prices is 6.5 per cent.

Interestingly, of the five main cities, the RPData show an annual increase in Perth (2.7 per cent), Brisbane (5.0 per cent) and Adelaide (3.9 per cent) that are well contained. Only Sydney (annual increase still a hefty 13.4 per cent) and Melbourne (8.6 per cent) are prices too strong.

So does it matter?

Well, sort of. If house prices are cooling already without the implementation of macro prudential policies or interest rate hikes, the RBA may be happy to rest easy and allow for the price growth to ease naturally as it has already started to do. An interest rate hike to cool property would be silly, and macro prudential policies may be extremely complex with consequences outside the problem areas which are centred on Sydney and property investors.

A macro prudential tweak aimed at cooling investor demand may still be on the offing and it would be no bad thing. But it might be wise for the RBA, having missed the opportunity a year ago to cool the housing market, to do nothing and wait for the easing in house price pressures to continue to work its way through the market. It now seems very likely that by early to mid 2015, house prices will be recording very small changes in monthly and quarterly terms meaning that the for annual rate of house price increase will slip to 5 per cent and lower.

The market seems to be correcting without the need for a significant policy change. It soon will be time to move on from the problems in the labour market, with rising unemployment and plummetting real wages needed some attention.