House prices set to fall for a second straight year despite recent signs that the property market could be improving.

The RP Data-Rismark Hedonic home value index reported that Australian property prices were flat in August compared with a 0.6 per cent rise in July and one per cent gain in June.

RP Data research director Tim Lawless said the figures suggested the boost from interest rate cuts was “working its way through the marketplace and potentially starting to fade away”.

The traditional influx of property listings as winter gave way to spring coincided with the waning effect of the interest rate cuts.

“I would be very surprised if we saw any material improvement in property values before the end of the year,” Mr Lawless said on Monday.

“It is fairly likely that we will continue to see at least a flat result over the next three months.”

A flat finish to calendar 2012 would mean a second straight year of falling property prices, given the market is down 0.6 per cent in the eight months to August.

Australian property prices fell 3.8 per cent in calendar 2011.

Mr Lawless said some of the mining-related states would face challenges.

“For any resources-driven market like Perth, or to a lesser extent Brisbane and Adelaide, statements like ‘the boom is over’ will potentially impact on consumer confidence,” Mr Lawless said.

The Reserve Bank of Australia has cut the cash rate by 1.25 percentage points since the beginning of November 2011, although the big retail banks have passed on less than that in interest rate relief.

Economists expected the RBA to keep the cash rate unchanged at 3.5 per cent at its September board meeting on Tuesday.

The August RP Data report showed Sydney had Australia’s highest median dwelling price at $530,000, up 2.4 per cent from three months ago.

Melbourne property prices had risen 2.5 per cent to $465,000.

Darwin posted the largest increase in percentage terms in the three months to August, with prices up 5.2 per cent at $497,000.