So the smart people like Louis Christopher from SQM Research and Pete Wargent from AllenWargent property buyers were right – the dip in house prices in the 6 week people around May was seasonal. The housing market was still strong and prices were still robust even though the RPData was showing what at face value were notable price falls.

The RPData house price series now shows that prices are up 1.3 per cent so far in June (just one day to go) to largely reverse the 1.9 per cent price drop in May. In recent weeks, the price rises have been solid which suggests further seasonal increases are likely in the near term, especially with interest rates remaining near record lows.

Even the RBA was caught up, a little, with the house price fall discussion, when it noted after the June Board meeting that “dwelling prices have increased significantly over the past year, though there have been some signs of a moderation in the pace of increase recently”.

The impact of rising house prices on the economy is generally positive – there is a boost to household wealth, builders are more inclined to increase construction and banks are happier with their balance sheet.

Strong house prices also create imbalances in the economy and can freeze out new buyers from the market. There is also the greater risk of those imbalances creating macroeconomic problems if or when they unravel. It also, other things being equal, the monetary policy risks are tilted to higher interest rates.

For now, the recent house price swings are not enough to change the view that the RBA is on hold, including this Tuesday when it meets to discuss interest rates. With the economy seemingly softening in recent months with commodity prices down and the Australian dollar strong, the balance of issues to force the RBA to move rates in either direction remains finely balanced with house prices now back in the “hike” column.