Australian capital city home values have fallen by 2.7% during the 2011 calendar year, according to the latest research from RP Data.

According to the RP Data-Rismark Home Value Index released yesterday, home values continued to decline during the month of May, falling 0.3%. This contributed to a full 2.7% seasonally-adjusted decline since the beginning of 2011, or 2.3% over 12 months.

The report said that in capital cities, "performance has been varied and counterintuitive to the purported resources boom."

"Sydney is the only market to have recorded a modest capital gain over the last year, up 1%, while homes in Canberra have also held ground. All other capitals have slipped into the red, with some down by significant margins."

According to research director Tim Lawless, the two weakest results were Perth, where dwelling values are down 7.5% year-on-year, and Brisbane, which has declined by 5.9% over the last 12 months.

"Despite what appears to be fairly strong fundamentals, the Perth housing market doesn’t appear to be turning just yet," said Lawless. "For a city that is recording rapid population growth, low unemployment and a large private capex boom, house prices have nevertheless been contracting since late 2007 after years of above average capital growth in the pre-GFC period. Today the critical missing piece of the puzzle seems to be buyer demand."

Lawless said the trend of premium markets taking the brunt of the market correction has continued, with the top 20% of capital city suburbs ranked by price recording a fall of 3.9% over the 12 months to the end of May.

A bright spot for investors is that rental growth has seen gross yields increase significantly, with the countrywide median rental yield for apartments at 5%.

"The best rental yields can be found in Darwin (5.7%), Canberra (5.4%), Brisbane (5.2%) and Sydney (5.2%)," said Lawless.

The market's future performance is likely to be sluggish, added Lawless, who commented that consumers "are well and truly focused on saving, not spending".

"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. As a consequence, transaction volumes in the real estate market are about 20% below the five year average and listing volumes are about 25% higher than what they were last year."