Melbourne has seen a huge 3.2 per cent growth in its housing market last month, surpassing all other capital cities.
Sydney, which normally leads in market growth, only saw a 0.8 per cent rise, while Brisbane followed with a 0.7 per cent jump in the last month.
Hobart surprisingly beat the major cities, and recorded a 2 per cent rise in growth but still remains the most affordable city, with the median price of $340,000.
The growth in Melbourne has pushed its median house prices up to $610,000.
It surpassed its previous peak, set in October 2010, at $593,600. In just the month of January median house prices rose $22,500 in Melbourne, and were pushed up by a high rate of auctions.
In the last quarter, the auction average was more than a thousand a week, REIV CEO Enzo Raimondo says.
“Sellers were also confident of making a sale, with about 12,800 auctions held during these three months,” he says.
He believes the increase was driven by investors encouraged by low interest rates and a hot market.
“Low interest rates, a record number of auctions, and an increase in million dollar-plus sales all led to an impressive quarter for the market,” he said.
Sydney still holds the highest median house price, sitting at $660,000.
Investor borrowing grew by 7 per cent last year, compared to 3 per cent in 2011, showing a new confidence in entering the market.
Despite the strong growth, these highs aren’t predicted to stay, with many analysts expecting the market to cool in the coming months.
RP Data senior analyst Tim Lawless believes such high figures in Melbourne will have to soften.
“The January figure is very high; I’d be surprised if we saw this level of growth continue – I think Melbourne will slow down into the year.”
The growth was not felt in all states, with Adelaide recording zero growth, while Perth and Darwin both recorded negative growth at -1.1 per cent.
The Demographia International survey, which ranked cities in seven countries based on house prices against income, found Melbourne was less affordable than New York but more affordable than London.