House price falls across Sydney and Melbourne are accelerating according to new data that shows the nation's key property markets are facing their most challenging period in a decade.

The Australian Bureau of Statistics on Tuesday reported capital city prices fell by 1.5 per cent in the three months to the end of September.

Capital city house prices continuing to fall: ABS Credit:Rob Homer

The biggest fall was in Melbourne where prices dropped by 2.6 per cent. The Melbourne market has now turned negative at an annual rate, down by 1.5 per cent.

In Sydney, prices dropped by 1.9 per cent to be off by 4.4 per cent over the past 12 months.