Recent house price index data for December is suggesting the Australian housing market may be at the start of a downturn.

Prices in Sydney and Darwin were seen falling the most at -0.9%, and even Melbourne where a boom is supposedly still on, posted a 0.2% decline.

Casting a technical eye on the matter, the below chart of the House Price Index suggests prices are crossing an important chart rubicon after the release when it broke below the up-trendline drawn from 2009.

The break suggests a much deeper fall is on the way, probably of about the same extent as the height of the rising channel above the trendline - which is to say roughly 4.0%.

This is line with predictions from Commonwealth Bank of Australia (CBA).

"We expect national dwelling prices to flat-line over 2018. But, there are likely to be some variations between the capital cities, with Melbourne, Adelaide and Hobart prices staying in the moderately annual positive territory while Sydney, Brisbane, and Perth show modest falls," says CBA Senior Economist Michael Workman.

It is also quite possible that the housing market may be entering a new downcycle, according to Workman.

"Dwelling prices in Australia are strongly cyclical. After a period of strong prices growth over the past five years, housing markets are now adjusting," says the economist.

The main reason for the adjustment is a host of regulations introduced by the authorities to cool-down the overheating housing market, including tighter lending regulations, higher interest rates on interest only loans and higher stamp duty for foreign buyers.

Yet if house prices slide in 2018 and the Aussie defies expectations and rises, it could create a perfect buying opportunity for late cycle-foreign property investors to pick up some deals in the second half of the year.

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