Capital city house prices have grown at their strongest annual rate in almost seven years after interest rate cuts and investor demand lit a fire under property values in Sydney and Melbourne, according to CoreLogic.

The property analytics group says Sydney dwelling prices grew 2.6 per cent in February, bringing annual growth to 18.4 per cent — the highest since the 2002 calendar year, when the early 2000s housing boom began to slow.

Melbourne prices grew 1.5 per cent in February and 13.1 per cent annually.

CoreLogic's head of research Tim Lawless said the combined capital city annual growth rate recorded in February of 11.7 per cent marked a high point in the current cycle and was the strongest figure since the 12 months to June 2010.