Australian city home prices declined in June, the first time in 17 months as interest rate hikes sent auction clearance rates lower.

Median national home prices slumped by 0.8 per cent in June, in raw terms, from a 0.6 per cent climb in May, according to RP Data-Rismark figures. It was the biggest monthly decrease in home prices since April 2008, slashing the median national dwelling price by $3000 for the month to $465,000.

''As mortgage rates have normalised, participants in the housing market have cut their house price growth expectations, which explains the current change in conditions,'' Rismark International managing director Christopher Joye said in a statement.

Official interest rates have ascended six times since October to 4.5 per cent, increasing the average cost of mortgages by $300 a month. Since February, auction clearance rates, a key reading on market resilience, have plunged from 80 per cent to about 60 per cent in Melbourne and Sydney.

While the RP-Data figures indicate a downward slope in house prices, a survey released yesterday showed market players expect a slowing growth in house price gains in the coming year. The National Australia Bank June quarter property survey found that real estate agents, developers and other residential industry predict a slight price growth of 1.4 per cent over the next year, down from the 5.4 per cent growth forecast three months earlier.