The latest CoreLogic RP Data figures for January show that Melbourne property prices grew 2.5 per cent in January, compared to Sydney's 0.5 per cent rise.
That has now pushed Melbourne to the fastest year-on-year property price appreciation of 11 per cent, passing Sydney where dwelling price growth has slowed to its lowest annual pace in 29 months at 10.5 per cent.
"We've been seeing Sydney consistently drifting lower since about July last year, when values were rising at about 18 per cent per annum," CoreLogic RP Data's research director Tim Lawless said.
"Melbourne has also slowed down, but not quite as much ... we can see that in a whole bunch of other indicators as well, auction clearance rates for example in Melbourne were consistently higher than what Sydney was over the second half of the year."
That trend has continued into the new year, with Sydney posting a sub-50 per cent clearance rate last weekend (45.2 per cent) with only 59 properties under the hammer, while Melbourne maintained a 71.3 per cent clearance rate on 151 auctions.
While the year-on-year price rises for Sydney and Melbourne were still a long way ahead of all other capitals, a 2.8 per cent January jump for Canberra pushed it to 6 per cent annual growth, and Hobart's 4.7 per cent surge last month saw it post a 2.3 per cent annual rise.
"We are seeing some of those smaller cities - that have underperformed over the previous growth phase - now starting to show slightly better fundamentals, probably due to their affordability and also their higher [rental] yield profile," Mr Lawless explained.
Brisbane and Adelaide posted modest annual growth, while the resource-focused cities of Perth and Darwin saw both monthly and annual price declines.
