A prominent US economist who tipped the US housing market collapse says Australia's high house prices are at risk of slumping if interest rates rise further.

Center for Economic and Policy Research co-director Dean Baker said a significant rise in interest rates in Australia would result in a ''sharp drop in house prices''.

“I have noticed the run-up in Australian house prices and it sure looks like a bubble to me,” Washington-based Mr Baker said.

The Reserve Bank will meet on Tuesday to decide whether to lift the current 4.5 per cent interest rate to 4.75 per cent. Markets and economists are divided about the chances, with about 50 per cent of investors tipping a rate rise, while 13 out of 21 economists polled by Bloomberg also expect a rise.