Sydney and Melbourne market crashes with prices plunging by 4.2% in a year but ...

Property prices have plunged in Sydney and Melbourne as national house and apartment values went backwards for the first time since 2012 - and it's tipped to get worse.

Real estate data group Core Logic has revealed Sydney was the worst performing market during the past year, with property prices diving by 4.2 per cent.

In more bad news for home owners, national property prices have shrunk on an annual basis for the first time in six years as stricter lending rules scared off investors.

Property prices have plunged in Sydney (Oran Park pictured) and Melbourne as national house and apartment values went backwards for the first time since 2012 - and it's tipped to get worse

Property prices have plunged in Sydney (Oran Park pictured) and Melbourne as national house and apartment values went backwards for the first time since 2012 - and it's tipped to get worse

Real estate data group Core Logic has revealed Sydney was the worst performing market during the past year, with property prices diving by 4.2 per cent

Real estate data group Core Logic has revealed Sydney was the worst performing market during the past year, with property prices diving by 4.2 per cent

Sydney and Melbourne, which together make up 60 per cent of Australia's housing market, had a shocking three months, with house and unit prices shrinking by 0.9 per cent and 1.2 per cent, respectively.

However, one city is bucking the trend with Hobart property prices surging by 12.7 per cent during the past year as quarterly values climbed by 3.7 per cent in the three months to the end of May.

Core Logic's head of research Tim Lawless said the Australian Prudential Regulation Authority's restrictions on lending to investors had hit the Sydney and Melbourne markets the hardest.

'The concentration of investment activity has been heavily skewed towards Sydney and Melbourne and it is these cities where

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