House prices in Australia have fallen for the fifth consecutive quarter after dropping 1.6% in Q3 2011, according to Australian Property Monitors.

All of the mainland capital cities recorded a fall in median house prices, with drops of 1.8% in Sydney, 0.9% in Melbourne, 2.7% in Brisbane, 1.6% in Perth, 1.4% in Canberra and 2% in Adelaide.

Dr Andrew Wilson, senior eEconomist at APM, said: “Buyer wariness over the quarter was exacerbated by growing concerns over the state of the international economy, a weakening stock market and a softening of economic activity as indicated by rising unemployment rates over the mid year period in all capital cities.

“Recent ABS figures have shown increasing home loan commitments and reported stable auction clearance rates point to some increased buyer activity and competition for properties in the now busy spring selling season. A potential fall in interest rates is unlikely to have a significant impact on house prices in the short- term, though this will nonetheless provide some welcome relief to mortgage holders and marginally improve housing affordability.

Annual median prices also fell in all cities with the exception of Canberra which saw a rise of 0.9%. The fall in Sydney was 1.6%, in Melbourne 3.6%, Adelaide 1.8% and whilst Brisbane remained steady, the biggest drop was in Perth at 5.7%.

Wilson continued: “The prospect still remains of ongoing economic growth in Australia, particularly in those states exposed to the resource sector, with modest property price growth expected to resume in some capital cities through the first quarter of 2012.”