For the first time in nearly two years, CoreLogic recorded a monthly decline in national home values.
The 0.1 per cent fall in December followed a flat result in November and a gradual slowing in the pace of growth over the course of the year.
Research director at the property data firm, Tim Lawless, was unsurprised by December's negative figure.
"This result represents the housing market catching up with the reality of market dynamics," he said.
After a moderate downturn in 2022, as the Reserve Bank of Australia first started hiking interest rates, home prices starting rising again even as the fight against inflation raged and the cash rate stayed elevated.
Given constrained borrowing capacity and cost-of-living pressures, Mr Lawless said the price growth clocked between February 2023 and October 2024 was surprising.
Though even the mid-sized capitals, which have been logging particularly strong price growth, have been starting to slow down.
Perth eked out the biggest property price increase in December, a 0.7 per cent gain to be a whopping 19.1 per cent higher annually.
Adelaide's market rose 0.6 per cent over the month, and Brisbane 0.5 per cent.
Darwin also clocked a 0.4 per cent improvement after a lacklustre 12 months.
"With worsening affordability constraints and reduced borrowing capacity, we have seen buyer demand pushed towards lower priced markets, which has, in turn, supported stronger growth conditions in these areas," Mr Lawless explained.
All other capitals recorded price declines in December, with Sydney down 0.6 per cent and Melbourne 0.7 per cent.
Rent increases are also starting to moderate, according to the latest data. (Diego Fedele/AAP PHOTOS)
Dwelling values are now down three per cent annually in Victoria's biggest city.
Regional markets fared a little better than their urban counterparts, with the combined regionals gauge up a modest 0.2 per cent over the month and six per cent annually.
While interest rate cuts would likely support housing demand in 2025, CoreLogic did not expect the easing cycle to trigger another phase of strong price growth.
In a welcome development for financially-stretched renters, the 4.8 per cent rise in rents over the calendar year was the smallest annual lift since the 12 months ending March 2021.
Despite rents starting to stabilise as overseas migration returns to more normal levels and household sizes trend higher, annual growth is still double the two per cent pre-pandemic average.
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