* Home prices in capital cities up 0.1 pct in April
* Slowest month-on-month rise in 16 months
* Too early to call a peak in the market - economists
* Sydney up 16.0 pct annually, Melbourne racing at 15.3 pct
* Hobart strongest housing market in April (Adds comments from economists, Treasurer)
By Swati Pandey
SYDNEY, May 1 (Reuters) - Home prices in Australia’s major cities skidded to a halt in April, a welcome respite for policymakers although economists say it is too early to call a peak in the red-hot housing market.
Property consultant CoreLogic said its index of home prices for the combined capital cities rose 0.1 percent in April, the weakest month-on-month rise since December 2015, compared with 1.4 percent in March.
Annual growth in overall prices slowed to 11.2 percent, from 12.9 percent.
The results come after dramatic gains in two of the country’s hottest markets - Sydney and Melbourne - over the second half of 2016 and early 2017.
“We’d be a little bit cautious calling it a top of the market,” said Craig James, chief economist at CommSec, echoing CoreLogic’s in-house views.
“We are seeing a bit more shifting of demand to regional centres from capital cities as interest rates remain low and demand is strong.”
If the softening trend can be sustained, it would vindicate steps taken by regulators in recent months to cool the heat in the property market amid concerns that speculation in housing could ultimately hurt consumers, banks and the economy.
Banks themselves have been raising mortgage rates out of cycle in response to the tightening regulations.
The Reserve Bank of Australia (RBA) is worried cutting rates deeper into record territory would only encourage more borrowing by already heavily indebted households. It is widely expected to leave rates unchanged at 1.50 percent for the ninth straight month when it meets on Tuesday.
The CoreLogic data showed home prices in Sydney were flat in April but the annual pace of growth was still a blistering 16.0 percent.
Melbourne grew 0.5 percent in the month with annual growth at 15.3 percent. Canberra, another hot market, suffered a fall of 2.8 percent.
Hobart was the strongest housing market, growing at 1 percent, with an annual gain at 13.6 percent.
Since January 2009, home values in Sydney have more than doubled while Melbourne has increased by 93 percent.
The inexorable price rise in the major cities has taken homes out of the reach of many first-time buyers and become a political hot potato.
The conservative government of Malcolm Turnbull has blamed a lack of supply for the problem and is likely to announce some measures in its budget next week.
“It’s incredibly frustrating, particularly for younger families trying to buy their first house,” Treasurer Scott Morrison told reporters in Canberra on Monday.
“If you don’t have a roof over your head that you can rely on, every single other problem that you have in life gets harder.” (Reporting by Swati Pandey; Editing by Kim Coghill)