Sydney's housing market continues to perform well despite low consumer confidence.
The latest research from RP Data found Sydney property prices grew 0.7 per cent over the December quarter, while the rest of the capital cities recorded declines in price.
Over the December quarter, Australia's capital city home values declined by 0.5 per cent
On a positive note, RP Data's director of research Tim Lawless said the December quarter was the year's smallest quarterly decline.
"According to our index, capital city home values fell by 1.5 per cent in the March quarter, and by a further 0.8 per cent in each of the June and September quarters. This rate of decline had decelerated to 0.5 per cent by the final quarter of 2011," he said.
On the outlook for the year ahead, Rismark's managing director Ben Skilbeck said he expects the RBA's interest rate cuts in the final two months of 2011 to lend further momentum to housing activity as transaction volumes pick up over February and March.
"If financial market pricing for substantial additional RBA rate cuts proves accurate, we could see a stronger-than-expected bounce-back in housing conditions," he said.
"Housing affordability in Australia has experienced a striking improvement in recent times. While disposable household incomes on a per household basis rose by five per cent over the year to September 2011, Australian dwelling values have declined by 3.4 per cent since September 2010. As a result of the RBA's rate cuts borrowers can now get fixed- and variable-rate home loans as low as 5.9 per cent and 6.14 per cent."