Home prices across Australia's major cities fell further in January as weakness spread out from the Sydney market in the face of tighter rules on investment lending - a relief to regulators but a potential drag on consumer spending power.

Property consultant CoreLogic said on Thursday its index of home prices for the combined capital cities slipped 0.5 per cent in January, after a drop of 0.4 per cent in December.

Annual growth in prices slowed to 3.2 per cent, from 4.3 per cent in December and 10.5 per cent in the middle of 2017.

After the boom: House prices fell last month, having peaked last year. Credit:Greg Newington

Prices in Sydney dropped 0.9 per cent in January, dragging annual growth down to just 1.3 per cent.