Why Melbourne house prices are surging as Sydney goes backwards, Core Logic ...

Australia's housing market is a tale of two cities with Melbourne property prices surging as Sydney real estate values plummet - but appearances can be deceptive.

Restrictions on investor lending and fatigue from several years of double-digit growth have caused the New South Wales capital to post some of the worse results nationally during the last financial year.

Home owners in both of Australia's biggest cities are being warned to brace for a slowdown in property price growth as stricter rules on investment lending scare off potential buyers.

Australia's housing market is a tale of two cities with Melbourne property prices surging as Sydney real estate values plummet (Petersham in the city's inner-west pictured)

Australia's housing market is a tale of two cities with Melbourne property prices surging as Sydney real estate values plummet (Petersham in the city's inner-west pictured)

Sydney was home to nine of the 10 worst performing housing markets, from the wealthy North Shore to the western suburbs, figures from real estate data group Core Logic showed.

Sydney's property market peaked in June 2017 with median house values of $1.080 million, which have since declined by 6.2 per cent to $1.012 million.

The story appeared very different in Melbourne, which had five of Australia's best performing real estate markets in the top 10.

Core Logic analyst Cameron Kusher said the result wasn't as rosy as it looked for the Victorian capital.  

Melbourne's market peaked later, in November 2017, with median house values of $834,318 which have since fallen to $821,463.

Melbourne had five of Australia's best performing real estate markets, with the Mornington Peninsula (Sorrento pictured) surging by 7.3 per cent

Melbourne had five of Australia's best performing real estate markets, with the Mornington Peninsula (Sorrento pictured) surging by 7.3 per cent

Australia's worst hit markets

Darwin, down 7.7%

Ryde, northern Sydney, down 7.4%

Inner west, Sydney, down 7.2%

Baulkham Hills, north-west Sydney, down 7.1%

Hornsby, Sydney's North Shore, down 6.6%

Blacktown, western Sydney, down 6.5%

Inner south-west, Sydney, down 6%

Northern Beaches, Sydney, down 5.8%

Sutherland, southern Sydney, down 5.3%

Parramatta, western Sydney, down 4.5% 

Despite the strong growth in Victorian capital prices during the past year, they are still 1.5 per cent below their peak eight months ago and are likely to decline in the year ahead.

'The weakness in Melbourne occurred much later in the financial year so the 12-month figures are still quite strong,' Mr Kusher told Daily Mail Australia on Monday.

'Pretty much all of those Melbourne regions are also seeing the rate of growth slow.'

The Australian Prudential Regulation Authority's crackdown on investor loans are expected to hit property values in Sydney and Melbourne in the year ahead.

'You've seen really strong growth over the last six years or so in both Sydney and Melbourne - affordability's stretched,' Mr Kusher said.

'The APRA crackdown is having an impact on Melbourne but it's

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