Australian home prices continued their strong gains in December, leading to the biggest calendar year rise in four years.

The RP Data-Rismark home value index shows capital city prices rose an average of 9.8 per cent last year, the biggest calendar year rise since 2009 when home values lifted 13.7 per cent.

Regional areas did not experience the same gains, lifting just 1.4 per cent over the year.

The standout performer for capital gains was Sydney, surging an average 14.5 per cent over the year, including a 4.1 per cent rise over the past three months, leaving the median dwelling price at $655,250.

That is nearly $100,000 more than the next most expensive city, Melbourne.

However, the Sydney market slowed a little in December, with prices rising an average of 0.7 per cent.

Melbourne prices were up 2.2 per cent in a strong last month of 2013, pushing annual gains to 8.5 per cent and the median price to $563,000.

Perth also had strong annual returns for property owners, rising 9.9 per cent, including a 1.3 per cent gain in December.

Investors missed best opportunity, analyst says

RP Data's Cameron Kusher says 2013 may have seen the best of the gains for these three cities.

"Across Sydney, we're seeing values up 10.9 per cent from their previous peak, and in Perth we're seeing that values are up 3.6 per cent from their peak," he said.

"Across the combined capital cities, values are now 3.5 per cent higher than their previous peak, but that's obviously being driven by the really strong growth we've seen in Sydney.

"[In Sydney, Melbourne and Perth] from an investors perspective they've probably missed their best opportunity to enter into those markets."

Mr Kusher says in contrast to home prices, rental growth has been "very sluggish" and that has pushed the yields for investors lower.

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He says investors, who have been driving much of the recent rise in property prices and are now accounting for around 40 per cent of buyers, may start looking to the cities that got left behind in 2013.

"The best opportunities are probably markets like Brisbane and, maybe to a lesser extent, Adelaide," Mr Kusher forecast.

"So I think 2014 will continue to see capital growth in the housing market, although I don't think it will be as strong as we've seen through 2013."

Australian median home prices: Sydney: $655,250

Sydney: $655,250 Melbourne: $563,000

Melbourne: $563,000 Darwin: $540,000

Darwin: $540,000 Canberra: $530,000

Canberra: $530,000 Perth: $520,000

Perth: $520,000 Brisbane: $445,250

Brisbane: $445,250 Adelaide: $386,000

Adelaide: $386,000 Non-capital city: $349,000

Non-capital city: $349,000 Hobart: $330,000

The best December gain was for Hobart, up 4.3 per cent in the month, but that result was only enough to lift Australia's southernmost capital from an annual loss to a gain of just 2.2 per cent.

Hobart is the nation's cheapest capital to buy a home in, with its median price of $330,000 around half that of prices in Sydney.

Adelaide also had relatively weak annual growth of 2.8 per cent, while Darwin (3.3 per cent) and Canberra (3.5 per cent) had modest 2013 gains.

Brisbane home prices rose 5.1 per cent over the year, leaving the median price at $445,250.