The court also heard the other sister, six years younger than the defendant, was the victim of an indecent assault when she was aged nine.
The defendant showed no emotion as he stood in the dock.
Judge Cameron said the defendant could only be sentenced for offences committed after his 14th birthday as he was not legally liable for offences before then.
Judge Cameron said the defendant had five previous convictions for dishonesty and violence but "notably" none of a sexual nature.
He said the court had received no victim impact statements but said the older victim was "sympathetic to his predicament" and did not wish him to go to prison.
Judge Cameron said imprisonment and home detention were not options as the defendant was under 17 when the offences were committed. He said the pre-sentence report indicated the defendant was at low risk of reoffending as long as the opportunity for treatment was taken up.
The defendant was sentenced to two years' intensive supervision, to reside at a certain residence and not move unless probation was notified, to undertake a psychological assessment and counselling to the satisfaction of probation and the psychologist, and to attend a treatment programme.
He was also ordered not to have contact with the two victims without prior written consent from probation and that he was to have no contact with anyone under 16 unless directly supervised by an informed adult. Judge Cameron also ordered the defendant be assessed for and complete a sex offenders' programme.