The latest housing data released by the Australian Bureau of Statistics showed that this March quarter, the national average of the residential housing market fell for the first time since September 2012. But in spite of this, the annual growth remains strong, especially in Melbourne.

However, the current prices could hardly be deemed affordable. Since the end of 2011 when the Reserve Bank began cutting rates, house prices in Sydney have risen by 53 per cent, compared to the overall inflation rising by just 8.4 per cent.

Still, the Reserve Bank believes that housing prices will ease over the next 12 to 18 months due to the strong backlog of apartment construction, especially in Sydney and Melbourne. At the moment, there are nearly 13,000 non-housing dwelling units in Sydney which had been approved for building, but for which construction had not commenced. In Melbourne, there are around 4,600 such units as of September last year. According to the RBA, this "would continue to add to the supply of housing over the next year or so, particularly in the eastern capitals," resulting in less heat in the housing market.

The mix of housing data across the nation has kept the Reserve Bank from cutting rates further. However, this might not last long due to the increase in the supply of residential apartment in Melbourne and Sydney and slow mortgage growth. The cash rate could be trimmed down to 1.5 per cent to stimulate the economy.