The Reserve Bank for the first time is expressing concerns for higher unemployment and lower inflation if house prices fell much further, as new figures showed a 58 per cent drop in investment from overseas buyers in the Australian property market.

Minutes from the bank's latest meeting show board members held an extended discussion about the economic fallout from an ongoing property market decline.

House prices rose by almost 50 per cent between 2012 and 2017. But Sydney dwelling prices fell by 12 per cent last year and in Melbourne they edged down 9 per cent. So far this month, Sydney values, as measured by CoreLogic, dropped by another 0.7 per cent and in Melbourne 0.8 per cent.

Commonwealth Bank economist Belinda Allen said much hinged on the Reserve Bank’s concerns about a ‘further fall’ in house prices.

The Reserve Bank minutes said the impact of the property market slump to date would be 'relatively small'.