City dwelling prices in Australia slipped 0.3 per cent during May from the previous month on a seasonably adjusted basis, data released by property expert RP Data-Rismark revealed.

May was the fifth consecutive month to report decline in house prices. The value of city houses dropped 1.2 per cent during the three months to May. Perth emerged as the weakest performing capital city, with value of an average house dropping 4.2 per cent over the May quarter.

All capitals reported decline in house prices in the May quarter, with Sydney the best performer of those shedding only 0.1 per cent. The median city house price was recorded at $420,000.

Tim Lawless, research director at RP Data-Rismark, said that the continuous decline in house prices showed that people focused on saving and pay-down debt, rather than spending.

Speaking on the topic, Lawless said, "Despite the low rate of unemployment and the strength of the resources sector, it is clear that the average Australian is content to pay-down debt and wait for some economic certainty to return.”

At 4.9 per cent, the unemployment rate is low, and many economists are of the view that the unemployment rate cannot dip much below 4.5 per cent without generating inflation in the economy.

Values of Australian dwellings have slipped 2.7 per cent so far this year.