The large migration wave to Australia is responsible for surging house prices in Melbourne, according to a Greek ‘Property Professor.’

The average Melbourne house price has risen to a record $480,000 in the September quarter-a $30,000 rise over the previous three months.

“Just like many Greeks came to Australia in the 50s and 60s and created a huge demand for property, we are seeing that again right now with Indians, and migrants from South Africa,” says Peter Koulizos, lecturer and author of the book, The Property Professor’s Top Australian Suburbs.

“Except unlike the Greek and Italians who didn’t come over with much money, these migrants are white collar workers and international students that have the money which is in turn forcing up the price of house prices.”

Real Estate Institute of Victoria Spokesperson (REIV), Robert Larocca agrees. “There is an increasing population of 1700 people a week arriving into Melbourne, which is a road of confidence, however creates pressure in the property market as these people need somewhere to live,” he says.

According to the REIV report, Surrey Hills enjoyed the largest median increase – up 24.6 per cent, from $905,000 to $1,127,500.

Pascoe Vale was second best performer for the quarter with a 23.7 per cent jump from $485,000 to $600,000.

Sam Mourtzas, 37, who has been looking to buy a house near Docklands says surging prices has prolonged his search.

“Fiscal stimulus and interest rate cuts pushed prices in 2009 beyond justified levels making it difficult for first home buyers or investors like myself to make a move on the property market,” he says.

“With demand increasing, property is becoming scarce and people are willing to pay extraordinary amounts for half a block.”

A deterioration in housing affordability was evident in the latest HIA-CBA First Home Buyer Affordability Report, which showed a decline of 3.3 per cent in the September 2009 quarter.

Despite increasing interest rates and the rapidly looming deadline of the First Home Owners Grant, Koulizos underscores that now is a good time to invest.

“Buying property is like moving up an escalator- if you do not get on, then you don’t have the opportunity to move into a nicer property as the value of your first property grows.”

He adds that it is advantageous to buy a smaller property closer to the city rather than a larger property further away.

“If are looking to make money in property, it doesn’t matter how old the building is, you can change it. Location is the most important factor and the land you own.”

Published last year, Koulizos’s book, Top Australian Suburbs advises investors which suburbs across Melbourne have the best capital growth potential over the next 20 years.

Based upon affordability and value, here are Koulizos’s
current top picks:

Braybrook. Median house price: 340,000-10km west of
CBD.

Two good indicators of capital growth in a suburb is government
investment and private investment such as shopping centres. Braybrook shows
evidence of both. There are five private and public schools in the suburb. It is
serviced by the bus and train, has two large shopping centres. One is known as
Central West Plaza which has been highlighted in the State Government’s
Melbourne 5 million plan- which is focused on developing new property including
apartments. A lot of housing commissions in Braybrook are also being replaced by
private housing.

Coburg. Median (2 bedroom) Unit price: 315,000-10km north
of CBD.

Coburg is not only highlighted in the Melbourne 5 million plan but
the local council is spending big money in the suburb. Coburg is serviced by the
bus and tram and includes eight schools in the area. There is also good shopping
along Sydney Road.

Kensington. Median (2 bedroom) Unit price: 350,000-4km
north west CBD.

You can purchase a lovely period style home in Kensington,
which is valued more highly than a modern style home. The suburb is going
through an urban renewal process due to increased Government spending on
transport and infrastructure as well as private investment. So what used to be
old abattoir is now becoming brand new housing, which will bringing up the
appeal of the area.

Flemington. Median Unit (1-2 bedroom) price: 279,000-
5km from CBD.

Flemington is so undervalued, despite its close proximity to
the city and character housing. Flemington is the Richmond of 20 years ago-
which although was once undesirable, became expensive due to urban renewal
increases. This is likely to occur with Flemington, which will benefit from the
ripple effect of next door Kensington. However, avoid buying property near the
Flemington flats.