The CoreLogic RP Data home value index is pointing to an on-going slowing in house prices.

So far in November, house prices have actually fallen 0.3 per cent, with the annual increase easing to 8.6 per cent from levels near 12 per cent a few months ago.

Interestingly, in the almost 8 months since the end of March, house prices have risen by just 3.5 per cent – an annualised rate of increase of around 5.25 per cent. It is not only possible but highly likely that during the first half of 2015, annual house prices growth will be well under 5 per cent and possibly – probably – even close to zero.

Of note, in the past three months, house prices have fallen 1.7 per cent in Melbourne and have recorded zero change in Adelaide. Prices in Perth are up a paltry 0.4 per cent and Brisbane, just 0.6 per cent. House prices in these cities are just fine.

The issue remains Sydney where prices on the last three months have risen 3.1 per cent – annualised 12.5 per cent or so, which is high, but even this is down on the 15 per cent plus annual growth a few months ago.

Once the Sydney house price euphoria subsides – and it looks to have in recent weeks with a glut of property on the market and auction clearance rates easing lower – house prices could well start to fall.

The initial stages of this decline would be welcome news. It would take away an imbalance in the economy, improve affordability and eliminate some of what is clearly a speculative element in the Sydney price boom.

It would also allow the RBA to cut interest rates and foster a lower Aussie dollar, essential issues if the overall economy is to maintain a 3 per cent growth pace in 2015 and for the unemployment rate to stabilise at 6.25 per cent.

The fear of course would be a sharper fall in house prices with all of the problems that entails, but that remains low risk and something to be discussed another day, once we get a few more months of flat or falling prices, especially in Sydney.