Falling house prices could lead to rising levels of unemployment, the Reserve Bank has warned, putting Australia's financial stability at risk as the Coalition and Labor turn the election into a test of economic management.

Bank stress tests indicate they can withstand double-digit unemployment rates and house price falls exceeding 30 per cent, but the central bank used its bi-annual review of the country's financial strength to warn debt and faster than expected house price declines had created "greater-than-usual uncertainty".

Australia's sagging property market is weighing on our financial stability, warns the RBA. Credit:Peter Rae

"There is a near-term risk that the delivery of a large volume of new apartments into a weak market could amplify price declines," the RBA said, suggesting the influx would produce "further downward pressure".

House prices remain 40 to 50 per cent higher than in 2012 but have fallen by 11.5 per cent over the past 12 months in Sydney and Melbourne, according to CoreLogic, with ratings agency Moody's tipping another 10 per cent decline this year.