Australian capital city house prices fell 0.2% in the March 2016 quarter according to the Australian Bureau of Statistics (ABS).

It’s the first decline since the September 2012 quarter.

Sydney residential property prices sank 0.7% compared to the December 2016 quarter, although Darwin saw price falls of 2%. Canberra and Perth were the other capital cities to see housing price growth sink.

Melbourne saw 0.8% growth in the quarter, with Brisbane and Adelaide also seeing home prices rise 0.3% and 0.5% respectively. Hobart was the strongest-performing city with a gain of 1.1%.

It’s also the third consecutive quarterly decline following a booming 4.7% increase in the June 2015 quarter as the chart below shows.

Source: ABS

Source: ABS

However, falling apartment prices were experienced in most of Australia’s capital cities, with Melbourne down 1.3%, Sydney down 0.6%, Perth and Canberra both down 1.1% and Adelaide lost 0.4%.

That is most likely due to the actions by 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) to limit lending to foreign investors. In some cases, the banks have even stopped lending to foreign investors.

Foreign investors, particularly Chinese buyers, are reportedly one of the biggest segments of buyers of brand new apartments in our capital cities.

Foolish takeaway

It’s probably a vital lesson for newish property investors who haven’t experienced price falls in the value of their property portfolios and that is –  property price don’t just go up.

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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.