Prices might have dipped but that decline might have also already peaked, Mr Lawless warned.

"If the trend towards an improving rate of decline persists, the Sydney housing market may have already moved through its peak rate of decline, after dwelling values have fallen by 3.9 per cent since their end of month peak in July last year," he said.

For the month of March, Sydney house prices posted a slide of 0.3 per cent but that had slowed from 0.6 per cent in February and 0.9 per cent in each of January and December last year.

Overall, the fall in values in Sydney was smaller than expected and Mr Lawless attributed the gentler pace partly to the return of investors to the housing market.

"One factor supporting this deceleration in value declines could be an improvement in credit availability for investors and interest-only borrowers," he said.

"Credit aggregates from the Reserve Bank show growth in credit for investment housing increased at an annualised pace of just 2.3 per cent over the three months to February; well below the APRA benchmark speed limit of 10 per cent."

While a large downward correction for Sydney was unlikely, a return to the boom of 2012 to 2017 was also equally unlikely, Mr Lawless added.


"Despite the potential improvement in credit availability for investors, rental yields remain low and credit policy is likely to be firmly under the spotlight following the banking Royal Commission."

"Considering these factors, even if the housing market is close to finding a floor, the prospects for a rebound in capital gains, as seen through late 2016 and early 2017, are far less likely."

The second biggest market, Melbourne posted a 0.2 per cent fall in house prices. Unlike Sydney, Melbourne is holding steady with a positive annual rise in house prices of 5.3 per cent.

Prices Hobart and Tasmania broadly continue to rise and is the best performing state.

Hobart's dwelling values rose 1.7 per cent in March, resulting a 13 per cent year to date increase. Regional Tasmania house prices have also risen 5.4 per cent over the past year.

Like Hobart, Mr Lawless said that regional Tasmania was flushed with capital from Sydney and Melbourne, as well as interstate migrants looking for more affordable housing.

In other regional areas, Victoria's Geelong topped the list for strongest price growth in the past year, up 10 per cent in the year to March followed by NSW's Southern Highlands and Shoalhaven.

Brisbane and Canberra dwelling prices were mostly flat in March, while Perth continued its recovery with a 0.3 per cent rise in house prices.

Unit prices are performing better than detached houses in the inner areas of Sydney and Melbourne. In the outer areas detached houses continue to be in demand and hold value.

"The March home value indices results also confirm that the unit sector is now consistently outperforming the detached housing market - a trend which has been evident since mid-2017," Mr Lawless said.

"More significant differences between houses and units can be seen in Sydney and Melbourne where housing affordability pressures are more evident relative to other cities."