The Reserve Bank expects bank lending to tighten further in the wake of the royal commission, telling homeowners to expect a "gradual" decline in house prices.

In their most comprehensive comments to date on the effects of the commission's final report, the central bank said while lending standards had been tightened in anticipation of its findings, it was possible that banks could restrict lending conditions further once it is released in February.

Analysts have noted the RBA's cautious language, warning it could become uncomfortable with further tightening leading to a faster decline in the Sydney and Melbourne markets.

House prices have fallen in Sydney and Melbourne. Credit:AAP

"Officials are alert but not alarmed by the decline in dwelling prices," said JP Morgan economist Ben Jarman.