A strong month has seen Sydney property values rise 3.1% in May, and 13.1% over the past year, with median dwelling prices now sitting at $782,000.

Over the past four years, Sydney home values have increased by 57%, according to data from CoreLogic RP Data. Melbourne dwelling values are up even more – 13.9% for the year and the median home price is now $590,000. Melbourne’s median price is up 39% in the past four years.

Australia’s combined capital cities saw year-on-year growth of 10% to tned of May 2016, although Perth continues to see home values sink – down 2.7% in May and down 4.2% compared to May 2015.

Darwin homes appear to be staging a recovery, with home values rising 0.7% in May, but still down 3.5% since May 2015.

And the statistics show that investors have left the market in droves, suggesting that owner-occupiers continue to upgrade or downgrade. Data from the Australian Prudential Regulatory Authority (APRA) shows that interest only lending is at its lowest level since March 2013, while new mortgages with a Loan to Valuation Ratio (LVR) of greater than 90% are at their lowest levels since March 2011.

CoreLogic’s head of research Tim lawless says that investor lending has slowed to 7% in the past year, which gives the banks scope to increase lending to investors. APRA had imposed a 10% growth limit on investor lending last year, after it threatened to get out of control.

Westpac Banking Corp (ASX: WBC) and its subsidiary St George told mortgage brokers last month that the new maximum LVR for new mortgages for property investors would be increased to 90% from 80% previously. Westpac’s growth in lending to investors was 7.2% in March 2016 – compared to 11% in the first half of 2015.

Other banks are likely to follow Westpac’s lead, including Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB).

Foolish takeaway

We should be careful to extrapolate any data and statistics regarding the property market leading up to the federal election on July 2, given the Labor Party has flagged it will make changes to negative gearing and capital gains tax. However, the recent cut in the official cash rate and mortgage rates was always going to stimulate the property market – it’s virtually what it is designed to do.

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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

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.