Domain's September Quarter House Price Report shows parts of the property market are surging into record territory, while other cities are languishing.

We take a look at the key findings of the report.

Sydney, Melbourne and Canberra property prices are at record highs.

In Sydney, the median house price reached a new high of $1,068,303 at the end of September,  a 2.7 per cent increase over the quarter. But house prices in Sydney have only increased 2.1 per cent over the year, the lowest annual growth rate since September 2012.

The median Sydney unit price reached $685,865, a 1.1 per cent increase for the quarter and an annual growth rate of 0.9 per cent.

“Lower interest rates and a strong local economy have fuelled house price growth while unit prices also continue to rise despite significant levels of new apartment construction,” said Domain Chief Economist, Dr Andrew Wilson.

"With buyer and seller confidence high, further increases can be expected for the remainder of 2016,” said Dr Wilson.

Melbourne prices achieved the strongest growth for the year to September 2016. Melbourne house prices have hit a new record high of $773,669, a quarterly price rise of 3.1 per cent and annual increase of 9.1 per cent. The September quarter marks Melbourne's sixteenth consecutive quarter of growth.

Melbourne unit prices rose 4.5 per cent over the quarter to $466,779.

Dr Wilson said high levels of migration mean the population is keeping pace with the supply of new apartments. 

“Melbourne’s high levels of migration mean that record levels of new apartment construction is not impacting unit prices which continue to grow,” he said.

Hobart is still the most affordable capital city in the country, with a median house price of $338,703, and a median apartment price of $251,073.

House prices decreased in Perth, Darwin, Brisbane and Adelaide over the quarter. In Perth, house prices were down 2.0 percent for the quarter, and down 3.8 per cent for the year. In Darwin, house prices were down 10 per cent for the year, and 3.3% for the quarter.

"Darwin house prices continue to weaken following the recent decline in migration levels into the city," said Dr Wilson.

In Brisbane, house prices declined 0.9 per cent during the quarter, but the city recorded one of the strongest growth rates for the year, with house prices rising 3.2%.

"A resumption in price growth is likely over the remainder of the year with increasing investor and first home buyer activity,” said Dr Wilson.

Around the country, the median house price rose 1.7 per cent over the quarter, and 3.5 per cent for the year, according to the Domain report.

See also:

Median house price up in Brisbane, in a quarter of surprises

Sydney median house price drops below $1 million

Australian median house price exceeds $650,000