House prices rose 0.3% in April, according to the RP Data-Rismark combined capital city index. The rise was a sharp slowdown from the 2.3% increase in the index in March--the biggest one-month rise on record. In the year to April, house prices were 11.5% higher.
House prices in Sydney, Australia's most populated capital, recorded growth of 0.5% in April, pushing the median house price above A$800,000 (US$736,000) for the first time, the report showed. In Brisbane, house prices rose 1.1%.
Tim Lawless, head of RP Data's research department, said the slowdown in the rate of house price growth should be welcomed.
"The strong market conditions have sparked a new round of debate around the sustainability of recent rates of housing value growth and the impact on affordability for housing, particularly in Sydney and Melbourne," Mr. Lawless said.
"The reduction in the rate of capital gains across the combined capital cities housing market brings growth back into a more sustainable range and will be a welcome relief for first home buyers," Mr. Lawless added.
The central bank has warned about rising house prices in recent months, with property investors driving the increase which has been fanned by record low interest rates.
The Reserve Bank of Australia cut its cash rate target to 2.5% in August last year to cushion the economy against a slowdown driven by a fading mining investment boom.
The RBA has signaled it expects interest rates to remain low for some time as the economy also battles an elevated currency and subdued confidence levels.