AAP

Two separate indicators released on Tuesday show housing prices remain weak, confirming there is no need to worry that an interest rate cut might spark an inflationary explosion.

The Australian Bureau of Statistics (ABS) said the average price of established houses in the capital cities fell by 1.1 per cent in the March quarter, the fifth fall in a row.

The fall took prices down by 4.5 per cent from a year earlier.

Compared with the June 2010 quarter peak, the ABS measure was down by 6.1 per cent.

Allowing for rising consumer prices, the fall from the peak was a neat 10 per cent, a steep fall as far as housing prices go.

At the same time, the RP Data-Rismark hedonic daily home value index fell by 0.8 per cent in home prices for the month of April, taking prices down by 4.5 per cent for the year to April.

These measures are compiled using different methodologies but are telling much the same story, nonetheless.

High prices, weak employment growth, sagging investor and consumer confidence, lending standards tightened in the wake of the global crisis and, until recently, low levels of immigration, have all ganged up on the housing market.

The Reserve Bank of Australia (RBA), whose board was holding its monthly monetary policy meeting as the figures were released, will not necessarily keen to stoke the housing market up again.

However the figures will help to confirm that the risk of accidentally setting off an upward inflationary spiral by cutting interest rates is not significant.

Earlier on Tuesday, an Australian Industry Group - PwC survey showed a sharp fall in manufacturing activity in April, confirming large sections economy really could do with an interest rate cut.