Melbourne Houses Over $1m Mark for First Time

Melbourne house prices are surging with new data showing median house prices in the city's inner ring have topped $1 million for the first time.

The median house price in Victoria has experienced one of the biggest quarterly increases, according to data from the Real Estate Institute of Victoria.

Houses prices in metro Melbourne were up 8.8 per cent from the previous quarter to $1,004,500, REIV’s quarterly March report found.

REIV president Leah Calnan said that after last year’s extended lockdowns in Victoria, activity in the state's property sector returned with an estimated 35,000 transactions in the March quarter.

Calnan said this represented the most transactions since the March quarter in 2015.

“With people spending more time at home than ever throughout last year, families took the opportunity coming out of lockdown to upgrade their home,” she said.

“This benefited house prices in middle Melbourne, the typical suburban family belt, which increased by 6.9 per cent from December to $1,148,500.

In March, Australian property prices rose at their fastest pace in 32 years.

Given the environment of rising house prices and low-interest rates, the RBA said it will be monitoring trends in housing borrowing after keeping interest rates at the historically low level of 0.1 per cent earlier this month.

Melbourne house price growth

^{^ Real Estate Institute of Victoria’s quarterly March report}

Regional Victoria was the initial leader of the exodus to an “affordable lifestyle” trend. The REIV data showed houses in regional Victoria surpassed $500,000 for the first time, a 4.1 per cent increase from the December quarter, and up 12.3 per cent annually.

Regional unit prices recorded a 5.9 per cent quarterly increase, up 19.1 per cent during the 12-month period.

In his latest report, Hotspotting's Terry Ryder said Melbourne home prices were forecast to rise 18 per cent during the next two years.

Westpac has estimated an 8 per cent lift in dwelling values this year, and a further 10 per cent in 202, while ANZ is tipping a 16 per cent rise in Melbourne values this year.

“It’s a notable turnaround after major lenders (including those big banks) were predicting home prices would fall as much as 30 per cent in worst-case scenarios as the pandemic created negativity last year,” Ryder said.

“Melbourne has one of the nation’s most consistently strong economies and most dependable property markets.

“And it has proven its resilience once again with the strength of its rebound, having put the lockdowns of 2020 behind it.”

Latest Domain data found that Melbourne's rental market recorded price falls for house and unit rents during the past year and quarter, which means the city is now the second-most-affordable capital city to rent in, tied with Perth.

Inner Melbourne unit rents dropped by $110 a week, according to Domain figures.

Vacancy rates for Melbourne remain elevated at 8.3 per cent in March, according to SQM figures.

This week 1209 homes are currently scheduled to go under the hammer in Melbourne, up from 1059 last week. A year ago, 1016 auctions were held in the city, Corelogic research showed.