One of Australia’s chief central bankers says talk of a falling housing prices doesn’t keep him awake at night.

Reserve Bank assistant governor (financial markets) Guy Debelle told a mortgage and finance industry lunch in Adelaide that housing price falls as seen in parts of Europe doesn’t keep him awake at night.

A recent survey by property information service RP Data showed house prices in across Australia’s capital cities fell an average 5.3 per cent in the 12 months to May.

Households in Australia were managing their debt levels and there was no oversupply of houses, Dr Debelle said.

Dr Debelle said he was more concerned about the ongoing global uncertainty over the European Union.

“I think the day of reckoning is going to happen in Europe … but nobody knows how it will play out,” he said.

“It is in the hands of Europe’s leaders.”

Dr Debelle said expectations had been lowered about what might happen at a meeting of European leaders in Brussels this week to discuss the euro zone crisis.

Dr Debelle said housing credit growth in Australia was expanding at about the same pace as household income and that the biggest challenge for banks in the next 12 months was likely to be recalibrating profitability expectations to mid single-digit lending growth.