Demand for housing in Australia has cooled following the decision to raise interest rates by 0.25% back in March, according to a Westpac Bank analyst.

Andrew Hanlan, a senior economist with the bank, said "There is evidence suggesting that the housing sector has indeed taken a backward step,"

The number of home loans taken by owner-occupiers fell 1.8% in April from March after excluding refinancing.

Figures from the Australian Bureau of Statistics show house prices were mostly unchanged in the March quarter rising by just 0.2% on average across the capital cities, to be up 0.4% over the year.

In the big cities, however, prices are falling. In Sydney, house prices fell by 3.4% over the year to March, while prices in Melbourne dropped 1.7%. In Canberra, prices slipped 1.3%.

In Adelaide and Perth, house prices bucked the national trend, rising 8% and 9.9% respectively over the year to March, while Darwin prices jumped 9.6%. In Brisbane, growth was a little slower at 2.5%, but reports suggest that the city is now bracing itself for a downturn.