Interest rate cuts have flowed through to the property market with house prices in some capital cities enjoying a surge in the past month.

Dwelling values jumped by 1.6 per cent across the combined capital cities in May, leading to 5 per cent growth so far this year.

The housing market performed better than the unit market with its values up 1.8 per cent compared with 0.1 per cent for units.

Despite a slow down in property price growth in Sydney, its values surged 3.1 per cent during May.

Canberra values increased by 2.5 per cent, Hobart by 2.2 per cent, and Melbourne by 1.6 per cent.

Brisbane and Adelaide had a slow month with values up by just 0.1 per cent, while Darwin values were up by 0.7 per cent.

Perth values dropped by 2.7 per cent.

CoreLogic RP Data analyst Cameron Kusher believed the latest growth nationally was driven in part by the latest interest rate cut.

“We are now in a very low interest rate environment,’’ he said.

“People are looking at where they can get a return and even though Sydney’s been slowing in terms of the capital growth the returns are still so much stronger than other asset classes and that’s why we are seeing this renewed strength in the Sydney and Melbourne housing markets, particularly.

“But also other capital cities we are now seeing that the growth is filtering into those markets, Brisbane has seen quite a strong level of annual growth, Hobart and Canberra as well.

Property values increased in many capital cities in the past month. Picture: ThinkstockSource:ThinkStock

“I don’t necessarily think this bounce we have seen over the last few months will continue. Obviously we are coming into winter and you are going to see less new stock coming onto the market, less active buyers, the real test will be obviously once we hit spring if the market still has momentum or if it regains that momentum.

“This growth phase has been going for four years now, you have got to think that even though interest rates are low and potentially going lower it can’t or it won’t be allowed to run all that much longer.’’

“You can see some of the strength from Sydney and Melbourne is starting to spread elsewhere, so you have 7.1 per cent growth over the year in Brisbane, 6.1 per cent in Hobart, 5.7 per cent in Canberra and on the other side of things you are still seeing weakness in the Perth and Darwin housing markets over the year.

“We kind of thought that Brisbane, Hobart and Canberra would see their growth in values pick up but it is a little bit stronger than we probably expected at this point in time.’’

“Adelaide is still plodding along slowly but nowhere near the rate of growth that we are seeing in some of the other capital cities.’’

Mr Kusher was surprised that interest rate cuts were still having an affect on the market, particularly as they were already so low.

“I would have thought that interest rate cuts at this point in time would not have as much of an impact as they have in the past, but it is the reality you deal with when you are in a low interest rate environment. People are searching around for a decent return and not many other asset classes are offering at the moment.

“Even though Sydney and Melbourne housing had slowed a little bit the returns are still far superior to most other asset classes.

Mr Kusher said there appeared to be a bit of a return of investors to the market in the past months with financial institutions lending a bit more to investors now.