Australian home values have fallen 2.7 per cent so far in 2011, with another small decline in May.

The widely-watched RP Data - Rismark Hedonic Home Value Index shows capital city prices fell 0.3 per cent in May, seasonally adjusted, and are down 2.3 per cent over the 12 months to May.

House prices outside the capitals also eased, falling 0.1 per cent in May and 1.4 per cent over the past year.

However, at $325,000, the 'rest of state' median property price remains well below the $470,000 median capital city dwelling price.

The best performing capital city for housing investors over the three months to May was Darwin, with a 2.1 per cent rise in prices.

All other capitals recorded price falls in the May quarter, with Sydney the best of these dropping only 0.1 per cent.

Sydney is also the only capital city to have recorded any price growth over the past year, albeit a modest 1 per cent.

Perth was by far the worst performer, with prices down 4.2 per cent over the May quarter, and 7.5 per cent over the past year.

Brisbane values were down 1.4 per cent in the quarter, and 5.9 per cent over the year to May.

RP Data's research director Tim Lawless says, nationally, there has been a 25 per cent increase in the number of properties listed compared to last year, but transactions are 20 per cent below the five-year average.

"I don't think we'll see any improvement to market conditions, firstly until we see some confidence pick up in the consumer set, and that largely revolves around some stability in interest rates," he told ABC News.

"Also, until we start to see a bit of the supply overhang become absorbed - there's a lot of properties available for sale at the moment... so buyers out there have a lot of stock to choose from, they've got time on their hands to make a purchase decision, and they can really work on the vendor to get a good price."

Rents rising

Tim Lawless says rents have been moving in the opposite direction from home prices, with most capital cities recording rent rises of around 5 per cent.

"I would say it is a landlords' market, certainly not a renters' market," he said.

"We are seeing vacancy rates generally below 2 per cent across most of the capitals which, of course, places quite a bit of upwards pressure on rents."

RP Data's figures show that has lifted rental yields to an average 5 per cent across the capitals for units, and 4.2 per cent for houses.

Darwin recorded the strongest yields of 5.7 per cent for units and 5.4 per cent for houses, with Melbourne having the weakest at 4.2 per cent for units and just 3.6 per cent for houses.

Mr Lawless says prospective property investors should make their decisions based on the rental yields they can achieve, as strong capital gains are a long time away.

"For those investors that have the confidence to get into the marketplace, now is good buying conditions," he said.

"You'd have to expect the yields should be improving, but they should certainly have a medium to long-term view on capital gains - I don't think there's going to be any gains over the short-term."