Home prices in Australia's major cities dropped for second straight month in May as consumers turned more cautious despite a cut in interest rates to record lows, an industry survey showed on Monday.

Figures from property consultant RP Data-Rismark showed dwelling prices fell 1.2 per cent in May, from April when they dipped by 0.5 per cent. Prices were still up 2.9 per cent on May last year with a median value of $491,000.

Melbourne house prices dropped 2.1% in May, Sydney's fell 1.2%. Credit:Rob Homer

Sydney home prices fell 1.0 per cent in the month, Melbourne dropped 2.1 per cent, Brisbane posted a 0.9 per cent loss, Adelaide fell 2.3 per cent, Canberra was down 1.3 per cent and Darwin slumped 3.5 per cent.

Perth and Hobart were the only capital cities to experience price growth in May, with prices up 1.0 per cent and 2.2 per cent respectively.