Prices in Australia's strongest property market, Sydney, have fallen for the first time in six years.
Prices in Sydney were down 0.5 per cent in the year to February, the first fall since 2012, contributing to the slowest rate of annual growth for national prices since 2016, according to the latest figures from CoreLogic.
The value of homes around Australia rose 2.2 per cent over the 12 months to February, and the gap between annual growth rates in the capital cities (2.0 per cent) and regional markets (2.8 per cent) continued to widen.
Annual growth rates have slowed in every capital city except Hobart, where home values are still at historic peaks, up 13.1 per cent from a year ago.
CommSec chief economist Craig James said Sydney prices could ease even further in 2018.
"Demand for homes is strong in Hobart, outpacing supply, and prices are rising," Mr James said.
"In contrast, the previously high-flying Sydney market is experiencing a correction in prices.
"More new homes are on the market, giving buyers greater choice.
"As a result, prices are adjusting to more realistic and sustainable levels."
Apart from Sydney, prices also fell in Perth, down 2.7 per cent, and Darwin, down 7.4 per cent
Prices in Melbourne rose 6.9 per cent in the year to February.
Prices there also have the potential to soften over 2018, Mr James said.
Values across the combined regional markets are higher, with regional NSW and Tasmania leading annual growth rates, at 5.7 per cent and 5.5 per cent respectively.
Regional West Australian home prices dropped 4.7 per cent in the last 12 months.
