Sydney and Melbourne house prices have shown their first monthly increase since the crest of the property boom in 2017, indicating a recovery could be in the pipeline.
Dwelling values in Australia's two most populous cities rose 0.1 per cent and 0.2 per cent respectively, according to data released Monday by property analytics firm CoreLogic.
It was the first monthly increase in Sydney values since the market peak in July 2017 while Melbourne dwelling values hadn't risen since the market there moved through a peak in November 2017.
CoreLogic head of research Tim Lawless said the May federal election and a 25 basis point cut to the RBA cash rate in early June may have played a role, but suggested that improving conditions through to mid-May were largely "organic".
The latest housing report by CoreLogic shows that the market may be in recovery. Source: AAP
A 0.2 per cent fall in national dwelling values was the smallest month-on-month decline in the national series since March 2018 and largely down to the new-found resilience in the NSW and Victorian capitals.
"Potentially we are seeing the first signs that the top end of Sydney and Melbourne's housing markets are leading the recovery trend," Mr Lawless said.
Since peaking in 2017, Sydney's top quartile values are down 17.1 per cent and Melbourne's top quartile is down 15.8 per cent, with both cities recording much larger falls across the top quartile relative to the broader housing market.
An expected lift in new supply could provide a fresh challenge over the next 12 months but CommSec economist Ryan Felsman said a tentative pickup in auction clearance rates augured well.
"Housing investors appear set to eventually end their recent 'strike' - especially given the hunt for yield across financial market asset classes," Mr Felsman said in a note.
The only other regions to record a rise in housing values in June were Hobart with a 0.2 per cent rise, as well as a 0.1 per cent lift for regional SA and a 0.2 per cent lift for the Northern Territory.
Canberra and Darwin property prices fell by 0.9 per cent in June, while Perth prices dropped by 0.7 per cent to be down by 9.1 per cent for the past 12 months.
Across the regional markets, values were 0.4 per cent lower in June to be down 3.1 per cent for the financial year.
The best performing regional markets over the past 12 months have been in Tasmania, however, despite the strong annual performance, the momentum is slowing across both Hobart and the regional areas of the state.
At the weakest end of the property market spectrum, the broader outback regions of Queensland, WA and SA recorded some of the worst conditions due largely to extreme weather such as drought and flood.
ANZ chief economist Shane Oliver said the Coalition's federal election win in May had benefited the major cities more than regional demographics.
"With Sydney and Melbourne likely to have suffered the most under Labor's proposed tax changes - because they have a greater share of investors in their property markets - they have naturally seen the biggest benefit from the election result," Mr Oliver said in a note.
However, he said downside risks remained thanks to high household debt ratios, tighter lending standards, and higher city rental vacancy rates.
"The situation today is very different to 2011, when the RBA first started to cut rates in this interest rate cutting cycle," Mr Oliver said.
"So while capital city average prices are likely to bottom by year end, we don't see a return to boom time conditions but rather expect broadly flat home prices through 2020."
