melb median tops $600,000 - 1st time ever

Melbourne house prices through the roof

Felicity Williams From: Herald Sun January 22, 2011 12:00AM

Melbourne's median house price surged $39,000 to $601,500 in the three months to December 31, the REIV's data showed. Source: Supplied

MELBOURNE home owners can pour the champagne - the median house price has smashed the $600,000 barrier for the first time.

Melbourne's median house price of $601,500 now rivals such cities as London, New York and Toronto for expensive homes.

Despite rising interest rates, the value of homes jumped $1173 a week in 2010 to break the psychological milestone by year's end.

The median house price has soared $330,000 in the past decade, with $180,000 of the increase happening in the past two years alone.

Melbourne now rivals Sydney - Australia's most expensive real estate market - where the median house price is $634,300.

The well-heeled areas of Canterbury, Hawthorn and Kew were the three top-performing suburbs in Melbourne.

Other standouts were the southeastern suburbs of Mount Martha, Frankston South, Mornington, Langwarrin and Seaford.


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But the boom spells the end of the Great Australian Dream for first home buyers.

The $600,000 landmark is a cruel blow to first home buyers, who are already facing skyrocketing mortgage repayments.

Real Estate Institute of Victoria CEO Enzo Raimondo said the traditional free-standing house with a quarter-acre block was out of reach for many people.

"We've seen over the past five years housing get proportionately more expensive," he said.

Buyers were now looking for cheaper medium-density homes and units, he said.

"For some people it suits their lifestyle, but for other people that's what they can afford. Over the past decade in Melbourne we've seen back yards diminishing in size as the amount of available land we have to live in has also come under pressure.

"It's going to make the great Australian dream all the more difficult for the average person to attain."

Melbourne's median house price surged $39,000 to $601,500 in the three months to December 31, the REIV's data showed.

The price surge will put pressure on the Reserve Bank to push up interest rates.

The Housing Industry Association warned Melbourne prices would be sluggish this year as rising interest rates culled the number of prospective buyers.

"We're of the view that we'll see a flat trajectory in house prices this year, so there won't be much growth," spokesman Andrew Harvey said.