National stratified median house prices remained effectively unchanged at +0.1 per cent for the September quarter - the third consecutive quarter of declining growth - following falls in house prices in most capital cities, according to Australian Property Monitors.

National unit price growth has been falling now for four consecutive quarters, with actual prices declining, recording a slight fall of -0.4 per cent.

In the housing market, Sydney and Melbourne were the only capital cities to experience positive price growth for the quarter, with Sydney growing by 0.7 per cent and Melbourne increasing by 1.2 per cent. However, even in these cities the trend is for slowing growth.

In all other cities, price growth was also on a downward trend, with Hobart house prices remaining unchanged and all other cities falling between - 1 per cent and - 1.9 per cent in the September quarter.

For units, prices fell in all capital cities except for Melbourne, which experienced a slight rise of 0.6 per cent over the quarter. In Sydney, four consecutive quarters of softening now sees unit price growth entering negative territory for the first time since 2008, falling by -0.1 per cent in the September quarter.

The rate of annual price growth is declining as the moderation of prices experienced over the June and September quarters offsets the strong growth experienced over the equivalent period last year.

Annual growth in the housing market still stands at a solid 11.5 per cent, but is down from the 15.2 per cent achieved in the June quarter. This trend is also mirrored for units, with annual price growth declining significantly from 12.1 per cent reported in the June quarter, down to 6.5 per cent.

APM Head of Research Yvonne Chan said "This quarter's results show the effect on prices of increased borrowing costs following the normalising of interest rates, together with falling auction clearance rates and lower levels of housing finance. Additionally, the removal of the First Home Owner Boost has resulted in significantly reduced first homebuyer demand."

"In the short- term, with national house price growth at 6.1 per cent for the nine months to September, and with expectations of rising interest rates, APM anticipates that prices will remain flat or fall slightly for the remainder of this year with this trend to continue into 2011."

"The outlook for property prices remains stable, supported by an undersupply of new housing, solid population growth, low unemployment and strong income growth. Rents are also predicted to increase, and coupled with softer house prices, rental yields will improve encouraging a return of investors into the market," she said.