Melbourne suburbs continuing to grow in value terms include Footscray, Altona, Sunshine and Spotswood in the west, Preston and Epping in the north, Burwood East, Montrose, Mount Waverley and Glen Waverley in the east and Seaford and Chelsea in Melbourne’s south.

The Real Estate Institute of Victoria said the state's property market finished 2015 on a high with a record number of auctions held in November and December.

"While median house price growth is expected to moderate this year, population increases, a robust economy and relatively low interest rates will encourage buyer interest in 2016," said REIV CEO Enzo Raimondo. "In 2016 the REIV expects moderate growth across the city with further price increases in a range of suburbs in Melbourne’s inner, middle and outer rings."

So why are these the suburbs to watch in 2016?

Footscray: Close to the CBD and recorded double-digit growth in 2015. Footscray remains affordable given its location in Melbourne’s inner ring. Improving infrastructure and gentrification likely to result in solid long-term growth. Median price: $780,000 

Altona: Close to the CBD (13km) and to the bay and has seen double digit growth in 2015. Private sales market tightened in 2015 and clearance rate increased, despite listings being up 17 per cent. Median price: $710,125

Sunshine: Still offers very affordable buying and is within 11km of the Melbourne city centre. Larger land blocks are proving attractive to both buyers and developers. Median price: $530,000

Spotswood: Another inner west Melbourne suburbs which is poised for further growth in 2016. Despite listings increasing significantly in 2015, the median days on market fell 23 days and clearance rate improved 13 per cent. Median house price remains well below the inner Melbourne median of $1,236,000. Median price: $775,000

Preston: Has seen solid growth in recent months, reflected in strong private sales activity (median number of days on market declined seven days in 2015). Located within 10km of the CBD, Preston’s median house price remains well below the inner Melbourne median of $1,236,000. Median house price: $815,000

Epping: Located on the fringe of Melbourne’s middle ring, Epping recorded solid price growth in 2015, driven by a strong private sale market. Poised for further increases in the coming 12 months. Median price: $432,750.

Burwood East: A big growth area with extensive development underway at present. While the median house price is high, days on market continue to fall (down from 37 days in 2014 to 30 days in the past 12 months) showing increasing buyer interest. Median price: $1,004m

Montrose: Has a relatively affordable median house price for those buying in Melbourne’s east and has shown good signs of capital growth in the past 12 months (up 10%). A significant drop in median days on market in 2015 (down 11 days to 19 days) has resulted in a strong private sales market. Median price: $600,000

Mount Waverley: Experienced one of the highest median price increases of any Melbourne suburb in 2015, up more than 20 per cent, but should still see growth this year. Attractive to foreign investors and quality local schools (Mt Waverley Secondary College) are also proving to be a key driver for buyers. Median price: $1.38m

Glen Waverley: Middle-eastern suburb which has been in the spotlight in 2015, and will continue in 2016. Given it is zoned for quality public school Glen Waverley Secondary College, buyer demand is likely to continue for the foreseeable future. Median price: $1.319m

Seaford: Bayside and has experienced strong growth in the past six months. Like Sunshine, is also very affordable. Strong private sales activity and clearance rate. Median price: $530,000

Chelsea: Close to the bay and with good transport to the CBD. Saw a strong private sale market and solid auction activity in 2015 as well as double-digit annual growth. Should be a solid year ahead. Median price: $727,000