Falling house prices in Australia could be good news for mortgage holders, as they reduce the likelihood of interest rate hikes by the Reserve Bank of Australia (RBA). This was reported by Qazaqyia.kz citing The Guardian.

RBA board members will not be sitting on Monday and Tuesday discussing ways to prop up Sydney house values. However, RBA Governor Michele Bullock has made it clear that property is on her mind.

The central bank always expected conditions to ease in response to the rate hikes in February, March and May, but the housing market eased by more than anticipated in May. This appears to reflect a range of factors, including recent policy developments and a general softening in housing market sentiment.

Jonathan McMenamin, a senior economist at Barrenjoey, told News24 on Monday that the RBA board will try and play down the housing market to some degree, but still use that as a reason why they might be able to hold for a longer period of time.

Bullock believes the economy needs to slow further to wrangle inflation back to the central bank's 2.5% target over the next 12-18 months. The key question for her is whether this slowdown will be achieved through this year's three interest rate hikes, or if they will need to do more.

Here's where we have the silver lining for mortgaged households. Central bank officials are attuned to the knock-on effects to the economy, including the wealth effect and the turnover effect. When prices go up, people feel wealthier and spend more; when the property market is running hot, more homes change hands, boosting spending on appliances and furniture.

Falling property values should also weigh on housing construction, although some economists argue this effect has been blunted by the nationwide push to boost housing supply.

Westpac chief economist Luci Ellis says the weakness in the housing market provides the RBA with further confirmation that monetary policy is tight. Challenger's chief economist Jonathan Kearns agrees the property market travails will play into the RBA's deliberations, if only very marginally. "I still think there's a reasonable chance they will need to hike again," Kearns said.

Still, mortgage holders will take any good news. And for homeowners sitting on reasonable and sometimes hefty price gains over recent years, avoiding higher borrowing costs might seem worth the recent drop in values.