SELLERS are bracing for a horror month as the first weakening in Melbourne's property bubble appears.

Analysts say prices will start to fall and the best time to sell may have passed.

The auction clearance rate plunged to 76 per cent last weekend - the worst in more than a year and down from a high of 88 per cent in March.

Six interest rate rises in eight months added $317 a month to repayments on a $300,000 loan.

With the Commonwealth Bank forecasting two more interest rate rises this year, buyers are cautious about how high they bid.

Property firm RP Data analyst Cameron Kusher said prices usually fell when new home loan applications did. They started falling six months ago.

"We anticipate a slowdown in ... property value growth during the coming months, with capital city values having increased by 4.2 per cent during the first quarter of 2010," Mr Kusher said.

"Higher interest rates will make it more difficult for buyers to obtain finance, and if they are able to obtain finance it will cost more to service the debt."

Ray White general manager Marcus Williams said sales were relatively strong and there was no reason to delay buying.

"Property is a long-term investment and fluctuations in prices and interest rates over time should be expected and factored into the decision," he said.

Valuation company WBP Property chief executive Greville Pabst said rates were historically low and unlikely to herald a drop in property prices.

It was more likely prices would simply not rise as quickly.

The Real Estate Institute of Victoria tips 4237 auctions in May - 700 this weekend.

REIV communications manager Robert Larocca said auction numbers this month would be the most in Melbourne in May on record and the fourth highest for any month.

"The clearance rate may have dipped below 80 per cent, but given there is nearly twice as many homes on the market as last year it's a very strong outcome," he said.

Originally published as Bubble losing air