The softer economy on top of an acceleration in the fall in house prices, plus its impact on household consumption, has forced the Reserve to wind back expectations of an interest rate increase, with Dr Lowe saying a cut is now as equally likely as a lift in borrowing costs.

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The Reserve remains upbeat about the labour market with the national jobless rate sitting at 5 per cent.

But the NAB's quarterly survey of consumer behaviour shows workers are not nearly as confident as the Reserve Bank about job prospects.

Overall consumer anxiety hit its highest level in three years in the December quarter on the back of a surge in worries about job security. Cost of living remains the main concern for most consumers with utility bills the single biggest problem.

Almost four in 10 of those surveyed said they had experienced financial hardship in the past quarter, the highest level in two years, while consumers reported reducing their expenditure on non-essential goods.

Consumers also reported reducing their expenditure on non-essential goods, with many saying  they had cut spending on major household appliances, eating out, personal goods like clothes and also on medical expenses.

NAB chief economist Alan Oster said there had been a widespread lift in consumer anxiety over the past few months.

"Anxiety increased most over the cost of living and despite a healthy labour market, concerns over job security also climbed to its highest level since mid-2016," he said.

The Reserve Bank is closely monitoring the property market, looking for signs the fall in house values over recent months has resulted in consumers winding back spending intentions.

The Commonwealth Bank, in forecasts released on Thursday, said it believes median house prices could slip another 5 per cent in Sydney this year and edge down by 6 per cent in Melbourne.

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That would be on top of an 8.9 per cent fall in Sydney and a 7 per cent drop in Melbourne last year.

Such as drop in Sydney would take its fall from the peak reached in late 2017 to 15 per cent while in Melbourne the drop would be 13 per cent.

The rest of the nation's capitals are expected to do a little better although both Darwin (26.5 per cent) and Perth (19 per cent) will have suffered major declines since their peaks in mid-2014.

Commonwealth senior economist Gareth Aird said the decline in prices would largely be driven by a sharper fall in credit growth than had been expected and a drop in sentiment towards the property market in general.

"Sentiment is hard to forecast but has a big impact on prices because the relationship becomes self-fulfilling," he said.

"That is, if households expect prices to weaken then demand for credit falls and prices will continue to correct lower. We believe that we are in that part of the cycle now."

The RBA's monetary policy statement noted in its September report that house prices in Sydney and Melbourne had been easing, but since then the decline in values has accelerated.