Sydney home prices have tumbled by the largest amount in 18 months as the Iran war and Reserve Bank rate hikes amplified a downturn in the nation's two biggest housing markets.

Median home values in Sydney and Melbourne fell 0.6 per cent in April, property data firm Cotality revealed on Friday. 

Nationwide, home prices rose 0.3 per cent, but the pace of growth was slowing across the board as headwinds blowing in from the Strait of Hormuz gathered strength. 

Affordability and serviceability constraints were weighing on demand, Cotality head of research Gerard Burg said.

The RBA's two back-to-back rate hikes, with a third likely on Tuesday, and uncertainty driven by the Middle East crisis, had hit sentiment, he said. 

'When things get uncertain, people have a tendency to sit on their hands and wait and see, and that's a pretty negative trend for a high-value purchase, like making a home purchase,' Mr Burg told AAP. 

The median Sydney dwelling was still the nation's most expensive, at $1.29million, but Brisbane and Perth were rapidly gaining ground. 

The median Brisbane home, which climbed 1.2 per cent over the month to $1.12 million, is now worth 86 per cent of the Sydney median, compared to 76 per cent a year prior. 

In Perth, the median dwelling jumped 2.1 per cent to $1.04million, representing 80 per cent of the Sydney benchmark compared to 68 per cent a year earlier.

On the other side of the scale, the supply picture was improving, particularly in Sydney and Melbourne, where the total number of listings had pushed above the five-year average. 

'It's pointing to a market that's a bit better balanced than was the case across much of last year,' he said. 

Mr Burg said the improvement in supply in Sydney and Melbourne was mainly driven by more vendors looking to sell before property values fell much further, rather than a material increase in new builds on the market. 

Australia's chronic supply imbalance would continue to put a floor under prices for several years to come, beyond the short-term cycle. 

'When you take a look at the significant increase in costs that we've seen over the last couple of years, just making new projects feasible has become increasingly challenging,' he said. 

The National Housing Supply and Affordability Council warned supply chain disruptions caused by the Middle East conflict could shrink the housing pipeline by 33,000 new homes over the next three years. 

As a large user of diesel, the construction sector was particularly vulnerable to the oil shock, Housing Minister Clare O'Neil told a Property Council summit on Thursday. 

The government was working to secure more fuel supplies, but also looking to make it easier to build by reducing the regulatory burden, she said. 

'I absolutely believe there is far too much red tape and regulation in housing and that, if we are going to support you to build the homes our country needs, we're going to have to wind that back,' O'Neil said. 

She said a review of the National Construction Code identified three priorities: making the document easier to use with AI; reducing regulatory variation across state lines; and clamping down on new additions to the code that added complexity and cost.

But opposition housing spokesman Andrew Bragg said for all its talk about slashing red tape, Labor had little to show for it. 

The construction code was layered with gold plating, like mandating grab rails in bathrooms for young home builders, he said. 

'Only in Australia would you find so much red tape as to make a cheap house illegal.'