SYDNEY: Home prices in Australia's major cities fell 1.6 percent in January as flooding across Queensland further hit demand during a typically quite holiday period for home sales, industry data showed on Monday.

The fall was the biggest monthly drop since RP Data - Rismark began publishing its figures in 2005, though the impact of the dismal weather made it hard to know if it was just a one-off or the start of a weaker trend.

Prices in Queensland's capital of Brisbane fell 1.6 percent in January, from the previous month, while those in Sydney dropped 1.3 percent. Prices for the 40 percent of homes outside the major cities eased 1.2 percent.

City home prices were still up 1.2 percent on January last year, but that was a marked slowdown from the pace seen in late 2009/early 2010.

The Reserve Bank of Australia (RBA) raised interest rates four times last year, in part to restrain the rapid growth of house prices. The central bank holds its monthly policy meeting on Tuesday and is widely expected to keep rates steady at 4.75 percent, having hiked as recently as November.