Falls in house prices are bringing this asset class back to more realistic levels. While this will have macroeconomic fallout the case for cutting rates is still not that strong. Having resisted raising rates while prices were rising it would be folly for the RBA to cut rates solely on the back of house price falls to the same level as one to two years ago. The greater concern is ongoing trade tension and other related tensions such as China’s restrictions on Australia’s coal imports. The balance of desired action has moved slightly away from raising rates in the medium term, but it should still be the case that rates move towards neutral rather than being cut at the 12 month horizon.