The latest housing data from Australian Property Monitors shows softening conditions in all capital city markets except Brisbane and Adelaide in the March quarter.
Sydney and Melbourne saw growth rates ease while other cities recorded flat or falling prices.
House values in Sydney rose by 3.1 per cent in the period, a sluggish growth rate when compared with three months earlier.
“Although this is a solid result, it is nonetheless well down from the December quarter result of 5.1 per cent,” said APM senior economist Andrew Wilson.
The unit market also slowed, with prices rising by 2.6 per cent in the first quarter of 2014, compared with 3.2 per cent in the December quarter.
Dr Wilson said the frenzy of activity seen in Sydney in recent times may be coming to an end.
“The Sydney boom has well and truly faded, with house and unit price growth the lowest rate since March last year,” he said.
“The moderation of boom-time results in Sydney can be expected to continue as emerging affordability barriers and declining investor activity impacts the market.”
Melbourne also recorded weaker results in March than in December 2013, with growth of 2.8 per cent for houses and 0.2 per cent for units.
Perth had house prices remain flat while Canberra, Hobart and Darwin all recorded falls during the period.
Only Brisbane and Adelaide saw modest gains, with 0.9 per cent and 1.3 per cent growth in house prices over the quarter respectively.
Overall, Dr Wilson said, housing market activity appears to be moderating.
“Although growth rates in Sydney and Melbourne have declined sharply over the quarter to produce their worst results in a year, the two cities clearly remain the country’s best performers,” he said.
“Other capital city markets have recorded, at best, modest growth which clearly reflects the disparity of the multi-speed recovery profile of the current growth cycle.”