New data from Domain Group's March House Price Report showed that Sydney's median house price has fallen below $1 million, registering a 1.5 per cent price drop to $995,804. This slowdown can be attributed to the tighter regulations being implemented by the Australian Prudential Regulation Authorities.

According to Domain Group chief economist Andrew Wilson, little growth is expected over the rest of the year, although this is not necessarily a bad thing.

"We're entering a new environment of low and modest growth, but there's no sign of a strong fall," Wilson said. "Sydney is seeing a natural moderation of prices due to the de-camping of investors."

HSBC chief economist Paul Bloxham also welcomed the decline, saying it is a positive thing for a market where house prices have risen "almost 50 per cent in five years."

"If (the housing market) continued to run at double-digit growth, there would be concerns about overinflating the market. The pullback is a positive thing," he said. "House prices will level out, but it will be a soft landing and we're not expecting a big fall, we'll see house prices steady, or falling back a little bit."

House prices fell in five out of nine regions, with the lower north region posting the biggest increase at 12.2 per cent over the quarter. This is due to a lack of homes on the market for sale.

Meanwhile, the median price for apartments also slipped 0.7 per cent to $656,166. Apartment prices fell or recorded no growth in all but one of Sydney's regions over the March quarter.

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