Housing market drops for first time in 6 years

Australia's housing market is continuing to cool down, with prices on a national basis recording their first annual decline (-0.4 per cent) in six years.

The average capital city price fell 0.2 per cent in May, according to the latest figures from property analysis firm CoreLogic.

Melbourne has also overtaken Sydney as the worst-performing Australian capital.

Property prices in Australia's second largest city fell 0.5 per cent last month, and 1.2 per cent in the last quarter — with the median price down to $717,020.

In comparison, Sydney dwelling prices slipped by 0.2 per cent in May, and 0.9 per cent in the last three months.

Sydney's median price is $871,454, a figure which includes houses and apartments.

It is believed that tougher lending standards, plus weaker conditions in Sydney and Melbourne are behind the drop, as Sydney and Melbourne comprise approximately 60 per cent of Australia's housing market by value, and 40 per cent by number.