The Australian property market has hit the $6 trillion mark, but Melbourne has overtaken Sydney as the country's best performer.
Home values across Australia's capital cities pushed another 2.8 per cent higher in July and have lifted 11.1 per cent during the past year, data released by CoreLogic RP Data shows.
In the year to July, the market grew by half a trillion dollars, CoreLogic RP Data head of research Tim Lawless said.
But Melbourne eclipsed Sydney during the past three months to record the highest rate of capital gain, with dwelling values surging 6.1 per cent compared to Sydney's 5.4 per cent.
The two east coast cities are still miles ahead of other markets, with a two-tiered pattern of growth continuing in Australia.
In the past three years, Sydney home values have increased 48 per cent and Melbourne values are 32 per cent higher, while every other capital city has seen growth of less than 13 per cent.
The report comes as property prices last week posted strong gains.
The weekly report from CoreLogic RP Data showed that the average price in the mainland state capitals jumped 0.7 per cent over the week to Sunday, with Sydney up by 0.8 per cent and Perth by 1.2 per cent.
But while dwelling values climb across most cities, the pace of rental growth has slipped to a new record low, Mr Lawless said.
This is compressing rental yields, which increased by just 0.9 per cent over the past 12 months, the slowest pace on record.
"When you consider that Sydney rents have increased by just 2.5 per cent over the past 12 months while values have climbed 18.4 per cent higher, it is easy to see how yields are getting squashed," he said.
The only capital city where yields hadn't deteriorated over the year is Hobart, where rental growth has kept pace with value growth, CoreLogic said.
AUSTRALIA'S PROPERTY MARKET: THE PAST THREE MONTHS
* Best performing capital city: Melbourne (+6.1 per cent)
* Weakest performing capital city: Darwin (-3.0 per cent)
* Highest rental yields: Darwin houses (gross rental yield of 5.7 per cent) and Darwin and Brisbane units (5.5 per cent)
* Lowest rental yields: Melbourne houses (gross rental yield of 3.0 per cent) and Melbourne units (4.1 per cent)
* Most expensive city: Sydney (median dwelling price of $790,000)
* Most affordable city: Hobart (median dwelling price of $305,000)
(Source: CoreLogic RP Data)
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