Australian housing prices have experienced their steepest drop since the global financial crisis, according to property analysts CoreLogic.

Key points: The downturn is expected to be worse than during the global financial crisis

The downturn is expected to be worse than during the global financial crisis While prices have dropped in Sydney, Melbourne, Perth and Darwin they are rising in Hobart, Canberra, Adelaide and Brisbane but slower than before

While prices have dropped in Sydney, Melbourne, Perth and Darwin they are rising in Hobart, Canberra, Adelaide and Brisbane but slower than before Tighter lending criteria and a significant drop in foreign buyers are the biggest contributors to the drop in values

On a national basis, property prices fell 4.8 per cent last year — driven mainly by sharp declines in Sydney (-8.9 per cent) and Melbourne (-7 per cent).

The latest figures from CoreLogic show national dwelling values have slumped 5.2 per cent since their peak in October 2017.

"This is the worst fall we've seen since the GFC, which was a short and sharp correction, down about 5 per cent from peak to trough," CoreLogic's head of research Tim Lawless told ABC News.

"We see the Australian market slip further into negative territory — a longer and steeper downturn."

Values have dropped in half of the nation's capital cities, with Perth (-4.7 per cent) and Darwin (-1.5 per cent) also recording substantial falls.

The property market was driven lower by sharp annual declines in Sydney, Melbourne, Perth and Darwin. ( CoreLogic )

Prices are still rising in the other capitals — Hobart (+8.7 per cent), Canberra (+3.3 per cent), Adelaide (+1.3 per cent) and Brisbane (+0.2 per cent) — but at a much slower pace than before.

Tighter lending standards imposed by the banking regulator in recent years, were the main factor behind the property downturn.

However, the Australian Prudential Regulation Authority (APRA) lifted restrictions on interest-only lending in December, announcing they had "served their purpose".

The significant drop in foreign buyers and a rise in mortgage rates were also contributing factors.

No rescue package this time

Mr Lawless said the current housing downturn would be worse than experienced that during the global financial crisis because the Federal Government now has very little ammunition to stimulate the economy.

"We started to see interest rates coming down back in 2008, and a lot of stimulus came into the market in the form of the first home owner grant boost, cash handouts, infrastructure stimulus, and so forth," he said.

"I don't think we're going to see a lifeline thrown to the marketplace this time in that form."

To keep the economy afloat, the Reserve Bank (RBA) aggressively slashed interest rates from 7.25 to 3 per cent in the eight months between August 2008 and April 2009.

But there is not much room for the RBA to cut rates now as they have been kept on hold at a record low 1.5 per cent for 28 months.

"In addition, we're heading towards a federal election where we could see some taxation policies being changed, which could have a further negative effect on the market," Mr Lawless said.

Labor has promised to abolish negative gearing tax breaks for new investors who want to buy existing properties if it wins the next election.

The Opposition has also proposed halving the capital gains tax exemption from 50 per cent to 25 per cent. This means when investment properties are sold, 75 per cent of the profit would be taxable.

Weakest performing cities

Despite Sydney and Melbourne recording the weakest market conditions, they have fallen much less from their peak prices compared to Perth and Darwin.

Since July 2017, Sydney values have fallen 11.1 per cent, down to what they were worth in August 2016.

Meanwhile, the Perth and Darwin downturns have resulted in them dropping 15.6 and 24.5 per cent from their respective peaks.

This means both cities have shed their last decade's worth of gains, with Perth falling back to March 2009 prices, and Darwin reverting to October 2007 values.

Eight out the 10 worst-performing sub-regions were in Sydney. They ranged from an 8.8-per-cent slide in Sydney's inner-western suburbs to a 13.3-per-cent drop across Ryde last year.

Eight out of the 10 worst-performing regions were in the Sydney housing market. ( CoreLogic )

The other two weakest sub-regions were in Melbourne's inner-south (-10.5 per cent) and inner-east (-13.4 per cent).

Melbourne prices, on average, have dropped 7.2 per cent since their November 2017 peak.

For those who own property in Melbourne, their value has fallen back to what they were worth in February 2017.