Australian capital city home prices fell by half a per cent in the December quarter, according to a private sector index.

The RP Data-Rismark Home Value Index found prices fell by 0.2 per cent across capital cities, seasonally adjusted, in the month of December and 0.5 per cent for the quarter.

Perth was the worst performing capital over the quarter with home values falling 2.1 per cent.

But Brisbane recorded the biggest annual decline with home prices down 6.8 per cent year-on-year.

Sydney was the strongest performing capital, with home prices rising 0.4 per cent in the month of December and 0.7 per cent for the quarter.

The survey showed Sydney remained the most expensive capital with a median house price of $485,000, while Hobart was the cheapest with a median price of $328,000.

RP Data director of research Tim Lawless said the index showed the slide in house prices coincided with higher rental rates, improving the yields for investors.

“Weekly rents across capital cities were up 1.0 per cent over the December quarter and are now 6.3 per cent higher than at the same time last year,” he said.

“The average capital city dwelling is now offering a gross rental return of 4.6 per cent after a consistent trend upwards since mid-2010.”