PHOTO: Even the Reserve Bank has reacted as house prices keep sliding. ABC News: Liz Pickering

The more exaggerated the run-up, the greater the pain when the inevitable decline kicks in.

Australian housing prices have been unwinding at a serious clip now for close to a year and a half, led by the cities that kicked off the boom, Sydney and Melbourne.

Suddenly, what previously was brushed aside as a healthy correction, now has regulators and policy makers, including the Reserve Bank, concerned.

Policymakers have embarked on the delicate task of deflating a property bubble without bursting it — this year we’ll find out if they’ve succeeded.

While the declines so far are yet to present a threat to the broader economy, they are unlikely to be contained. Even normally cool heads are predicting a continuation of the great Aussie housing market unwind for at least the rest of this year.

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