PHOTO: Australia’s sagging property market

Falling house prices could lead to rising levels of unemployment, the Reserve Bank has warned, putting Australia’s financial stability at risk as the Coalition and Labor turn the election into a test of economic management.

Bank stress tests indicate they can withstand double-digit unemployment rates and house price falls exceeding 30 per cent, but the central bank used its bi-annual review of the country’s financial strength to warn debt and faster than expected house price declines had created “greater-than-usual uncertainty”.