Melbourne median property prices rose 2.5% in January, compared to just 0.5% in Sydney, according to the latest data from CoreLogic RP Data.

The results mean that Melbourne’s year-on-year (YoY) growth came in at 11%, slightly ahead of Sydney on 10.5%.

But homeowners, before you get excited, the rise may just be a blip in a longer-term downward trend. And it’s likely that Sydney home prices have peaked earlier than in Melbourne. Auction clearance rates clearly show that trend, with Sydney posting a sub-50% clearance (45.2%) rate last weekend, while Melbourne continues to enjoy higher clearance rates (71.3%).

That’s a danger sign for property prices. Sub-50% clearance rates in Sydney usually indicate a falling housing market according to Macquarie analysts.

Over the last three months, Sydney house prices have fallen 2.1% to a median of $776,000, while Melbourne median house prices were down 0.1% to $595,000, making the harbour city much more expensive to buy in.

Sydney’s annual property growth is now at a 20-month low and has been steadily falling since peaking at 18.4% in July 2015, according to CoreLogic RP Data head of research Tim Lawless.

There’s another problem for property investors too. Gross rental yields in Sydney and Melbourne are nearly at all-time lows – 3.2% and 2.9% for houses respectively, and not much higher at around 4% for units in both cities.

Housing price growth particularly in Sydney appears over for now and combined with the low rental yields, investors may be thinking twice about buying a property. Property investors also face higher interest rates, lower loan-to-valuation-ratios (LVRs) as well as ceilings on the amount that the banks will lend to them.

They can thank the banking regulator, APRA, for that.

APRA imposed restrictions on the big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) in particular, to limit investor loan growth to below 10% and it has worked so far.

Foolish takeaway

The fact Melbourne has overtaken Sydney in YoY property price growth means little really. It’s more an indication that Sydney house prices have already started falling, and Melbourne may not be all that far behind.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.