Strong demand for premium real estate, and a reinvigorated first-home-buyer market drove Melbourne house prices 13.2 per cent higher in 2017, the fastest rate of growth since 2010.
While the Melbourne housing market was recording slower rates of growth in the final quarter of 2017, it was still a record-breaking year for real estate, according to new data from the REIV.
Data from the REIV shows that house prices in metropolitan Melbourne rose for the seventh consecutive quarter during the three months to December, gaining 1.1 per cent and reaching a median of $821,000.
For the year, house prices rose 13.2 per cent, the highest rate of growth since 2010.
President of the REIV, Richard Simpson, said the strong growth during the year was boosted by the buoyant auction market, with more than 25 auction records broken throughout the year.
“While price growth slowed in the December quarter due to increased supply and reduced investor activity, 2017 was a record-breaking year for Melbourne’s property market,” he said.
“High levels of interstate and overseas migration, new government initiatives for first homebuyers, and record low interest rates, contributed to significant double-digit price growth last year.”
The best performing suburbs during the December quarter were at the top end of the market, and included Toorak, South Yarra, Surrey Hills and Canterbury.
“Demand for houses in the city’s most exclusive suburbs continues to outstrip supply," said Simpson.
But the more affordable end of the market also performed well during the December quarter, with the median house price in the outer suburbs rising 2.4 per cent quarter to $666,500.
“Increased participation from owner-occupiers is driving values in the city’s outer suburbs, with these areas offering buyers the ideal combination of affordability and space," said Simpson.
“Strong price growth over the past year has meant that houses within 20km of the CBD are almost out of reach for many first homebuyers," he said.
"These buyers are now looking for new entry points to the market, especially in established suburbs with infrastructure, amenities and services.”
Melbourne's apartment market
Melbourne’s apartment market rebounded in December with the citywide median price increasing 1.2 per cent to $594,500.
Regional Victoria also performing strongly
Regional Victoria also experienced its strongest property market in years, with house prices rising 2.6 per cent in the December quarter to a record high of $396,500. Prices were up 10 per cent for the year.
“Regional cities and towns within commuting distance of the CBD have certainly benefitted from strong price growth in Melbourne with a number of these areas now recording median house prices higher than those in the outer ring," said Simpson.
Read more about Victorian real estate:
Melbourne property market showing signs of slowing