Sydney and Melbourne posted gains in the first quarter of Knight Frank’s Global Residential Cities Index, which globally ranks cities with the fastest growing dwelling prices.

Sydney was ranked 23rd, with 14.4% growth over the year to March (the Harbour City was ranked 30th a year ago). As for the Victorian capital, Melbourne was ranked 24th on the index, up from 28th place a year ago. The city posted 13.4% price growth over the past year.   

Despite these hikes, the pace of Sydney and Melbourne’s gains is expected to slow down in the coming year. Findings from other researchers indicate that the housing market in the eastern capitals had begun to cool during the second quarter.

During that time, four Australian cities in total made the index’s top 50. Hobart took 34th place with 11.3% growth, and Canberra took 47th place with an 8.9% price rise.

Michelle Ciesielski, director of residential research at Knight Frank Australia, compared the four cities’ results with the same ranking six months ago, when no Aussie cities were in the top 50.

The pace of capital gains is likely to moderate over the rest of 2017 and 2018, according to Ciesielski.

“Many states have ramped up incentives to encourage more first home buyers into the market, lenders have increased mortgage rates for investor and interest-only loans, stamp duty concessions have been removed for off-the-plan purchases in Victoria and steep surcharges and fees have been imposed on foreign buyers, most recently announced in South Australia,” she said.