Home prices are falling in Australia's two largest cities as high interest rates and investor tax changes put pressure on an already soft market.
Dwelling values fell 0.9 per cent in Sydney, 0.8 per cent in Melbourne and 0.2 per cent in the ACT during May, according to data released by research agency Cotality on Monday.
While prices rose in other state and territory capitals, the growth was weaker than previously seen.
Cotality research director Tim Lawless said some of the weakness was part of the regular housing price cycle, but other factors were also playing a role.
"Late last year it was more about affordability and serviceability challenges as housing prices were outpacing incomes," he told AAP.
"Then towards the end of last year we started to see inflation accelerating, the RBA taking a more hawkish stance - that was a blow to confidence - and from there we saw interest rates starting to rise, global oil shock and now a budget has been handed down."
