Home values in Australian cities increased by 0.5% during August, slower than in previous months, the latest figures from RP Data show.

The increase was 1.6% in July and 1.9% in June but if the three months are taken together then values were up 4%, the highest rate of capital gain since the three months ending in April 2010.

According to RP Data research director, Tim Lawless, the slower month on month result is actually a welcome sign after the strong growth conditions of previous month’s fuelled renewed debate around the sustainability of property prices.

‘The half a per cent gain over the month of August is a much more sustainable rate of growth and will be a welcome turn of events for policy makers. While the recent surge in dwelling values has caused some renewed debate about an Australian housing bubble, it is important to remember that the average annual capital gain over the past decade has been just 4.3% across the combined capital cities,’ he explained.

He also pointed out that in Sydney the annual rate of growth has seen a much lower decline of 2.4% which is well below current inflation.