Sydney and Melbourne house values have retreated to 2016 levels as signs grow the fall in property prices is spreading across the rest of the country and depressing the number of homes on the market.

Figures from analysts CoreLogic on Friday showed house values in Sydney dropped by 1.1 per cent last month to be down 11.5 per cent over the past 12 months.

Melbourne values tumbled by 1.2 per cent and 4.8 per cent over the past quarter, making it the softest capital city market in the country. Over the past 12 months, house values have dropped by 11.5 per cent.

Sydney and Melbourne house prices have fallen back to 2016 levels amid signs the decline in the property market is now nationwide. Credit:Rob Homer

Dwelling values in Sydney are now back to July 2016 while in Melbourne they have retreated to their November 2016 level.