House price growth has started to cool, while the construction boom in the Melbourne and Brisbane apartment market has taken its toll with prices now starting to fall, according to data released by the Australian Bureau of Statistics.

The ABS Residential Property Price Indexes for the March quarter show attached dwelling prices in Melbourne fell 0.7 per cent in the first three months of the year.

While apartment prices in Brisbane edged up in the quarter, on an annualised basis the market deteriorated, with the Attached Dwelling Price Index slipping further, down 0.4 per cent from the same time last year.

The ABS noted the more pronounced falls in Melbourne's apartment market were in the middle-to-upper segments — $535,000 to $700,000 — which had seen the most growth in the 2016 December quarter.

While the quarterly figures are sometimes seen as a bit dated compared to monthly private surveys, they do provide deeper insights in corners of the property market across the nation.

Market House Price Index March quarter 2017 Percentage change QoQ Apartment (Attached Dwelling) Index March quarter 2017 Percentage change QoQ Sydney 2.9 3.4 Melbourne 4.1 -0.7 Brisbane -0.2 0.6 Adelaide 1.8 -0.1 Perth -1.2 -0.9 Hobart 3.4 3.1 Darwin -0.9 -0.4 Canberra 2.4 1.7

The first-quarter figures fail to capture important developments beyond March, including tougher lending regulations imposed — particularly on investors — by the Australian Prudential Regulation Authority, and the subsequent increases in mortgage rates imposed by the banks.

Market likely to cool further: analysts

JP Morgan's Henry St John said the data suggests there is an "unhealthy underbelly" in the Australian property market.

"The glut of apartment supply due to hit the market over the coming year, particularly in Melbourne and Brisbane, is starting to weigh on attached dwelling prices," Mr St John said.

"Melbourne, Brisbane and Sydney have seen a rapid increase in the number of apartment dwellings under construction since 2015, and we expect that apartment prices in these capital cities will continue to face downside pressure as supply continues to hit the market."

Mr St John said given investor lending was the key driver of the upswing in Sydney and Melbourne prices, capital city house price growth will continue to moderate this year unless owner-occupier buying picks up.

"This should start to become apparent in the second-quarter house price index, and the extent of the deceleration is likely to be highly dependent on the rate at which housing market turnover slows," he said.

The decline is not surprising given economists have been warning a glut in apartments was looming, driven by the record pace of construction over the past couple of years.

Overall, the ABS house price index grew at 2.2 per cent over the quarter, or 10.2 per cent for the year.

Sydney dwelling prices grew by 3 per cent for the quarter and 14.4 for the year.

Mr St John said the noticeable slowdown in investor lending was likely to soon become a drag on prices.

"The private measures of house price growth suggest some moderation is already taking place, although it is too early to assess the full impact that these measures are having, he said.

RBA still worried about household debt

The minutes from the Reserve Bank's June board meeting suggests house prices and household debt are still very much a concern for the board.

Central to the board's discussion was the use of tighter regulation of the banks in property lending by APRA to rein in household debt

"They (the RBA board) also discussed the role that prudential supervision can play in promoting financial stability," the minutes noted.

"In view of this, members acknowledged the importance of a strong relationship between the Bank and other regulators, particularly APRA."

Citi's Paul Brennan said it will take around six months before firm conclusions can be made about the impact of APRA's tougher stance.

"That said, there are some early positive signs on house prices and investor lending," he said.