House prices in Sydney and Melbourne posted the highest gains in Australia for 2010 according to data from RP Data/Rismark.

Prices only started to slow down at the end of the year. Median house prices in Melbourne's real estate increased by 8.4 percent last year with a 1.1 percent adjustment made during the last three months of 2010.

Moreover, house prices in Sydney were up by 6.6 percent during the same period and 0.9 percent for the quarter to a median level of $525,000, the researcher found.

In contrast, prices in resource rich state capitals Brisbane and Perth have fallen. Median house prices in Brisbane slowed by 0.5 percent in the December quarter prior to the devastating floods and 1 percent overall for the year. Prices in Perth also declined, slowing by 1.9 percent in December and 2.3 percent during the year to end at $465,000.

Housing prices in cities increased by 0.2 percent in December to $475,000 and overall home prices across the country increased by 4.7 percent in 2010.

"Almost all of the growth in capital city home values was experienced in the first quarter of 2010, when dwelling values grew by 3.6 percent," said Rismark managing director Christopher Joye."The RBA's four interest rate hikes in 2010, which were topped up by a fifth via the banks, conspired to snuffle out capital growth during [2010]."

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