Investing in property may have paid off handsomely over the last few years, but there are growing signs the market is starting to cool down.

Earlier this month, home prices registered their first monthly fall in a year, with a 1.9 per cent decline in May, according to RP Data. Other indicators also suggest softer conditions.

Auction clearance rates in Sydney and Melbourne have been drifting down lately, and lending to home buyers has been growing more slowly. Perhaps it’s seasonal, as some real estate agents claim. But this looks suspiciously like wishful thinking.

Among economists, there’s a growing consensus that the frantic activity that was ignited by record-low interest rates is starting to slow. Capital city house prices are still up 10 per cent in annual terms, but most analysts reckon homeowners will be getting smaller capital gains from now on.

This shouldn’t come as a surprise. Prolonged double-digit growth in house prices is unsustainable – and has a nasty habit of leading to financial crises.