Two more rate cuts says Domain's Dr Andrew Wilson

The Domain Group senior economist Andrew Wilson envisages the RBA could cut interest rates twice before year's end.

"If we don't get an improvement they can't justify not cutting again," he said, before yesterday's economic update.

Dr Wilson said there were not any signs of a housing correction.

"We have nothing like the pre-conditions for a sharp fall in house prices," he told Domain.

In the current housing market, he suggested three scenarios that could trigger a dramatic price drop of 5 to 10% in Sydney and Melbourne .

But he reckons none were likely.

Interest rates rapidly increased to 6 per cent

Unemployment above 10 per cent

Australian dollar dropping below US50¢

He noted if the Reserve Bank of Australia raised interest rates quickly and by a significant amount, a price crash could follow.

But for the Reserve Bank to willingly raise rates from 2% to 6%, economic growth above 5% would need to occur, said Dr Wilson.

"And the only way that will happen is if we have another unbelievable mining boom," he said.

"Even then they might not do it."

Dr Wilson also suggested a dramatic fall in incomes as a result of national unemployment rates increasing to more than 10% would have the potential to cause a collapse.

The third scenario related to currency. 

If the Australian dollar dropped below US50 cents, this could also prompt the Reserve Bank to react by hiking interest rates to levels that would cause a correction in the property market, Dr Wilson said.