Investment loans’ share of overall home loans has hit its lowest level since 2002, but this did not stop average median prices from increasing during the September quarter, according to the Real Estate Institute of Australia (REIA).

For the quarter, the weighted average median price for houses for the eight capital cities increased to $743,776, driven by the larger property markets of Sydney and Melbourne. All other capital cities witnessed a decline in average median house prices.

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The average median price units also increased, hitting $577,135 over the quarter. Sydney, Melbourne, Adelaide, and Hobart reported increases in this segment.

This came despite investment lending hitting its lowest share of overall home financing since 2002.

Currently, investment lending is 25.6% of overall home loans, considerably lower than the average of 34.4% and the peak of 43%.

In terms of rent, most capital cities registered stable gains for three-bedroom houses, with only Canberra and Darwin recording declines. For two-bedroom homes, only Sydney reported a decline in median rent.

The vacancy rate across capital cities averaged at 2.5%, indicating a mild tightening of the market.

"Just as the past period of stability in rents can be attributed to the increase in investor activity around 2017 the more recent drop in investor activity will lead to increases in rents in the future with current decreases in the vacancy rate a pointer to this," REIA president Adrian Kelly said.