Property prices in Kuala Lumpur dropped 0.6% during the 12-month period ended September 2018, as cooling measures and rising interest rates continue to affect buyer sentiment.

This is despite the fact that Kuala Lumpur, like many first tier cities in the region, continue to lead in residential price growth, according to Knight Frank in its Global Residential Cities Index for the third quarter of 2018.

"Asia-Pacific remains the top-performing world region, with a 6.2% increase over the 12 months period to the third quarter of 2018, up from 3.3% a year ago," it said.

Knight Frank Asia-Pacific research head Nicholas Holt added: "While the Asia-Pacific region continues to lead the world in residential price growth this quarter, its pole position is looking more at risk following the introduction of cooling measures, rising interest rates, and waning buyer sentiment."

He said a combination of these factors will likely lead to slowing growth momentum as we head into 2019.

The index tracks the performance of mainstream house prices across 150 cities worldwide, of which 44 are from Asia-Pacific.

Six Asian cities, including four from India, made the global top ten rankings, namely Xi'an, Ahmedabad, Hyderabad, Bengaluru, Hong Kong and Surat.

"Of the 150 cities tracked, 123 (82%) registered a rise in residential prices over the 12-month period with several first tier cities such as London, Melbourne, Shanghai and Kuala Lumpur seeing prices slip on an annual basis," said Knight Frank.

"Six Italian cities now sit within the bottom 20 rankings including Venice and Rome," it added.

Knight Frank noted that the Xi'an's local government had, in March 2017, eased residency requirements which led to the arrival of over 800,000 new residents, thus strengthening demand and prices.

The city saw a 20% increase in prices during the 12 months period ended September 2018.

"A range of cooling measures have since been introduced, the latest being a two home limit for Xi'an residents and a single property for non-locals. Xi'an tops the index this quarter, registering a price growth of 20%, almost twice the rate of growth of Changsha (10.9%), China's second strongest-performing city.

"Major Australian cities Sydney (minus 4.4%), Melbourne (minus 1.5%) and Perth (minus 0.5%) all recorded price declines in the last quarter," Knight Frank said.