Australia's two biggest housing markets have both recorded downturns for the first time since the Covid pandemic.

Data collected by Cotality found the value of properties in Sydney and Melbourne have declined since February.

As of Sunday, the rolling daily index showed those markets were down 0.04 per cent, The Australian Financial Review reported.

However, Australia's overall market is still growing with strong increases recorded in smaller capital cities.

Cotality research director Tim Lawless said the data indicated 'Sydney and Melbourne are clearly in a downturn'.

'We've seen more than three months of housing values moving backwards, even though clearance rates haven't been at this lower level [for all of that time],' he said.

'If you go back historically, there's probably only around five times in the last 15 years where we've seen clearance rates holding this low and they all line up with housing market downturns.'

The most recent of those historic downturns include the beginning of the pandemic in 2020, a tightening of credit in 2018 and 2019, and the rise of interest rates in 2011.

When offset by the strong growth recorded in Brisbane, Perth and Adelaide, the combined growth of all capital cities at 0.3 per cent.

Growth outside of capital cities was higher at 0.9 per cent. 

Mr Lawless said the rise of interest rates since 2022 and the added stress of skyrocketing fuel prices was likely causing buyers to tighten their purse strings.

Ray White chief economist Nerida Conisbee confirmed that while the market in Sydney and Melbourne had been slowing for several months, it was likely a temporary decline.

'While conditions have softened slightly, they remain well-supported by underlying demand. As a result, they are unlikely to move into negative growth in the near term unless there is a more material deterioration in economic conditions,' she said.

This week recorded a preliminary clearance rate, the percentage of properties sold at auction, of just 58.9 per cent.

It marked the third consecutive week the figure was below 60 per cent.

A total of 19 per cent of auction were withdrawn from sale across all capital cities.

That number was much higher in Sydney where 26.7 per cent of all sellers withdraw from auction. 

One of the most remarkable auctions in Sydney saw a large three-bedroom apartment in Botany sell for $1.665million, $65,000 above reserve. 

BresicWhitney agent Brigitte Blackman described the sale as a 'fast auction' but noted some properties in the city are 'not even getting any bids'.

Auction numbers are expected to fall next week due to the Anzac Day public holiday.