Settled sales transactions fell in the 12 months to April 30, indicating owners and investors are holding properties for longer.
The number of house sales across the country fell by 3.7% over the period, while unit sales were 9.7% lower, according to CoreLogic RP Data.
Figures were worse for the capital cities, with house sales down by 5.7% and unit sales down 12.2%.
CoreLogic estimates 339,026 houses and 132,081 units sold in Australia over the year, including 208,345 houses and 96,915 units in the capitals.
Annually, the proportion of house sales in a capital city was at its lowest level since January 2013, while unit sale transactions were the lowest for eight years.
The combined 471,107 property sales over the past year was down almost 26% from the 633,904 transactions over the 12 months to May 2002, the last sales volume peak year.
"Despite home values rising, transaction volumes continue to languish well below their previous highs,” said CoreLogic research analyst Cameron Kusher.
He predicted that "with fewer transactions in the market and tighter mortgage lending conditions, we’re expecting to see less upward pressure on home values as we progress through 2016".
“The high costs associated with exiting a property, such as agent commissions and stamp duty at point of purchase, are both likely to be major deterrents to an increased level in sales activity,” he said.
The slump in property trades comes as SQM Research found the number of properties listed for sale increased by 5.2% nationally compared to last year, with Sydney seeing by far the biggest increase in listings of all the capitals at almost 38%.
Kusher argued that "affordability constraints, particularly in Sydney and Melbourne, following consistent value growth in recent years, is likely leading to a decline in sales”.
Dwelling values in Sydney and Melbourne have gone up by 4.5% and 3.3% respectively over the first four months of 2016, both at or above the combined capital city average increase of 3.3%. But where Sydney apartments have seen capital growth of 4.2% in that time, the value of Melbourne units has fallen by 0.7%.
On Tuesday, the Reserve Bank of Australia cut the official cash rate to a record low 1.75%. Three of the four major banks passed on the cut in full to variable rate home loan customers, with ANZ passing on 19 basis points of the RBA's 25 basis point cut to its owner-occupier customer set.