According to REA's PropTrack, the annual rate of home price growth in Australian capital cities has slowed from 24% six months ago to 14% now.

This contrasts with experiences during the pandemic when the rate of growth was the third-fastest in history.

Hobart and Sydney have seen the quickest fall in price growth since 1986 and 1989 respectively, with Brisbane's at 2008, and Melbourne's at 2010.

The smaller capital cities of Adelaide and Perth have managed to steer clear of any major slow downs this year compared to their counterparts.

PropTrack economist and report author Paul Ryan explains the driving force for the slowdown in the market.

"Home price growth has slowed down quickly in 2022. The PropTrack Home Price Index showed that home prices fell in May, the first decline since the start of the pandemic. In the last six months, home price growth has experienced the most rapid slowdown in more than 30 years," Mr Ryan said.

"Interest rate expectations have been the key driver of this slowdown. Financial markets expect the RBA cash rate to be close to 2.75% at the end of the year, while other expectations are more moderate, sitting around 1.5 to 1.75%. As a result buyers have been more cautious in 2022.

"A two-percentage point increase in interest rates would increase average mortgage repayments by almost 25%."

Louis Christopher, Managing Director of SQM Research, expects buying activity to contract.

"Without stating the obvious, Tuesday's rate hike of 0.50% is a big negative for the housing market, especially on the demand side," Mr Christopher said.

"Many would-be buyers will defer their intended purchases, and many still will see their borrowing power reduced, regardless of their intent."

Over the next six months, it is expected that the housing market will see further declines.

"Looking ahead, the rapid slowdown in price growth signals the housing market is likely to continue to see slow growth over the rest of 2022," Mr Ryan said.

Many buyers and sellers anchor their expectations from recent sales momentum, which can embed these trends in market results."

Despite the slowdown, Australia's house prices are still up by 35% since the start of the pandemic.

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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