(Corrects September to August in the first bullet point, no change to text)
* Home prices almost flat in Sept, annual growth slows to 9.3 pct
* RBA to face Senate inquiry on risks of tougher lending rules
* Retail sales disappoint with slight 0.1 pct rise in August
By Wayne Cole
SYDNEY, Oct 1 (Reuters) - Home prices in Australia's capitals rose only marginally in September, slowing after three straight months of strong gains, with five of eight cities recording falls in the month.
The slowdown should actually be welcomed by the Reserve Bank of Australia (RBA)which recently has become concerned that a surge in borrowing to buy investment properties could lift prices to unsustainable levels.
The central bank is even considering whether banks should face tougher lending standards on some types of mortgages in an attempt to restrain investors.
Top RBA officials are due to appear before lawmakers on Thursday to answer questions on what measures might be proposed, and how to ensure they do not harm housing affordability or the supply of new homes.
Figures from property consultant RPData-Rismark showed dwelling prices in Australia's major cities rose just 0.1 percent in September, from August when they climbed 1.1 percent.
Prices were up 9.3 percent on September last year, again pulling back from August's 10.9 percent pace.
"The annual rate of appreciation in dwelling values has actually been moderating since reaching a peak in April this year," said RP Data research director Tim Lawless.
"A moderating annual trend, as well as the relatively flat September result, is likely to be welcome news to policy makers and potential buyers after the winter months recorded the largest capital gain since 2007," he added.
The RBA has been especially concerned about the red-hot Sydney and Melbourne markets, and there were some tentative signs of a cooling there.
In Sydney, home prices rose by 0.8 percent in September from the previous month, but the annual pace of growth eased to 14.3 percent from 16.2 percent.
Prices fell by 0.8 percent in Melbourne for the month, while the annual pace slowed to 8.1 percent from 11.7 percent.
Still, the housing market remained strong overall with auction clearance rates above 70 percent and turnover high.
The median price of a home in Sydney was A$655,000 ($572,000), compared to A$535,000 in Melbourne and A$530,000 across all the major cities.
Rising home prices had been initially tolerated by policymakers as necessary to encourage a much-needed revival in home building, which is indeed underway.
Higher values have also helped boost household wealth. The Australian Bureau of Statistics estimates the total worth of Australia's homes ballooned by A$493 billion in the year to June, or more than A$50,000 for each and every household.
Yet even this wealth effect is struggling to lift spending in the face of subdued wages growth and muted consumer confidence.
Figures from the ABS out on Wednesday showed retail sales rose a scrooge-like 0.1 percent in August, when analysts had hoped for an increase of around 0.4 percent.
Sales were still travelling better than in the second quarter, but look like providing only a modest contribution to economic growth.
That's important as the A$270 billion retail sector accounts for 17 percent of Australia's A$1.6 trillion in annual gross domestic product (GDP) and is the second-biggest employer with over 1.2 million jobs. (Reporting by Wayne Cole; Editing by Eric Meijer)