National home prices rose in September, new data shows, but some of the heat continues to come out of the housing market as more owner-occupiers and investors consider selling.

National house prices increased 0.4 per cent in the first month of spring and 6.7 per cent over the year, according to the latest study from CoreLogic.

It shows the median value of housing nationally now stands at $807,110.

The slowdown in the pace of growth comes as more home owners, some struggling under higher interest rates, look to sell.

The flow of new listings coming onto the market was tracking 3.2 per cent higher than a year ago nationally to be 8.8 per cent higher than the previous five-year average for this time of the year.

But the rise in listings in spring comes amid weaker selling conditions.

Auction clearance rates have wound back to the low 60 per cent range across the combined capital cities, which is about 4 percentage points below the decade average.

In Sydney, house prices were up 0.2 per cent in the month, 0.5 per cent in the quarter and 4.5 per cent over the year. The median dwelling value in Sydney is now at $1.2 million.

While Sydney home values have continued to rise, the quarterly increase was the lowest growth result since the three months ending February 2023.

In Melbourne, values were down 0.1 per cent in the month, 1.1 per cent over the quarter and 1.4 per cent over the year. The median dwelling price in Melbourne is at $777,390.

CoreLogic head of research Eliza Owen said weaker migration trends and the recent increase in land tax for investment properties in Victoria had taken some heat out of the market.

"Victoria, more broadly, has also seen more dwelling supply than any other state or territory in the past two decades," Ms Owen noted.

'The buyer pool is getting a little bit smaller'

Other states to record slight declines included Canberra, which was down 0.3 per cent for the month and 0.9 per cent over the quarter.

Hobart was also down 0.4 per cent for the month and 0.9 per cent in the quarter, while Darwin, which was up 0.1 per cent for the month but down 0.7 per cent in the quarter, also saw slight declines.

But values rose in Perth, which was up 1.6 per cent in the month and 4.7 per cent in the quarter, though the rise was far slower than previous quarters.

Gains were also evident in Adelaide, which was up 1.3 per cent in the month and 4 per cent over the quarter, and Brisbane, which was up 0.9 per cent in the month and 2.7 per cent in the quarter.

"This means that there aren't as many buyers for the amount of stock that's on the market.

"And for the buyers that are there, they might find they have a little bit more negotiating power in the transaction."

Rental growth slows due to easing overseas migration

Price rises in the rental market have also slowed.

The national rental index increased by just 0.1 per cent over the September quarter, the smallest change over a rolling three-month period in four years.

Ms Owen said the slowdown in rental growth was due to easing net overseas migration, with ABS data showing net overseas migration fell by 19 per cent from the record highs in the first quarter of 2023.

The March quarter of 2024 saw 133,800 net overseas migrants arrive in Australia, 31,700 fewer than a year earlier.

"We've started to see things like a normalisation in net overseas migration and more of a demand response, in the sense that share houses might be re-forming again, indicated by an increase in average household size," Ms Owen said.

The immediate outlook for housing markets was further growth in values, "but the rate of those increases will inevitably slow down," she said.

"That's because we haven't seen a reduction in the underlying cash rate.

"Borrowing capacity is still pretty constrained. Affordability is becoming more constrained.

"And even some of the strongest-performing markets over the past few months have seen a slight slowdown in the growth rate, like Perth, for example, where we've seen a pretty substantial reduction in the quarterly value increases."

Greg Brydon, an auctioneer at Ray White, said buyers were back in the market this spring but they were holding back.

"But now with talk of rates potentially being cut [next year] — it seems to have given some buyers some confidence to re-enter the market."

Ms Owen said interest rate cuts slated for later this year, or early next year, would "provide a boost to borrowing capacity and should help to support a further lift in confidence to make high-commitment decisions like buying a home".