Australian home prices in August continued a downward trend since the market peaked in May, according to RP Data-Rismark's capital city home value index. The figures come amid expectations price growth for the year will grind to a halt if the Reserve Bank of Australia lifts cash rates.

The index showed a seasonally-adjusted decline of 0.2 per cent after a 0.4 per cent rise in July, with the reading flat in unadjusted terms. The national city median dwelling price dropped to $457,000 in August from $465,000 in July.

Since the market peaked in May, following a string of 17 consecutive months of growth, the index has softened 1.2 per cent.

In the year to August, capital city home values rose by 8 per cent.

Prices outside of capital cities were unchanged, and slid 0.2 per cent, seasonally adjusted, in the three months to August.

Rismark International managing director Christopher Joye said Rismark was not forecasting any further capital growth in the second half of this year.

"Recent data vindicate this thesis. In the first seven months of 2010, capital city dwelling values have accreted by 4.8 per cent in raw terms, which is in line with consensus expectations for disposable household income growth," he said.

"If the resources boom combined with frisky consumer spending compel the RBA to lift the cash rate four to six times by end 2011, we would expect to see nominal dwelling values decline modesty."

The central bank, which started lifting rates in October 2009, is expected to increase rates again next month, with the market pricing in a two-in-three chance of a 25 basis point rise. That would move the official cash rate up to 4.75 per cent from 4.5 per cent.