• Metro Melbourne’s median house price has cracked the million-dollar mark for the first time, according to the Real Estate Institute of Victoria.
• Those properties climbed nearly $90,000 over the March quarter, reaching prices the median Sydney home hit in 2015.
• Unit prices continue to climb, despite falling rents in the city linked to international border closures.
• Visit Business Insider Australia’s homepage for more stories.

Metro Melbourne’s median house price has cracked the million-dollar mark for the first time, according to the Real Estate Institute of Victoria (REIV), as rock-bottom interest rates, homebuyer incentives, and a fear of missing out funnel buyers into the red-hot market.

Citing data from some 35,000 transactions in the March quarter, the REIV states the median metropolitan house price is now $1,004,500, jumping by nearly $90,000 in the last quarter alone.

The report signals that Melbourne’s metro housing market has rocketed to the point Sydney hit back in 2015.

House prices in suburban Melbourne reached loftier heights, with the median price topping out at $1,148,500.

Houses in regional Victoria also reached their own record highs, with median house prices outside of Melbourne reaching $510,500 thanks to a 4.1% uplift from the December quarter.

The latest data also suggests the typical metro Melbourne home now costs the equivalent of eleven years’ worth of average annual earnings – despite wages lagging well behind the growth in property prices.

The REIV attributed the boost to families wanting to upscale after the city’s coronavirus lockdowns, but the data shows an increasing number of singles are signing on the dotted line, entering a market once dominated by couples.

Low interest rates and government incentives, like the Homebuilder grant, have also convinced buyers to swarm the market.

Smaller properties received a boost, too.

The average sale price for Melbourne units climbed an astonishing $31,000 over the quarter, topping out at $672,500, or 67% of the average metro house price.

Buyer interest in units has come as rents in the city fall overall, largely due to the drop-off in international migration caused by the closure of Australia’s border.

But the continual influx of unit buyers suggests a long-term optimism in borders reopening, with an attendant uptick in potential tenants.

Leah Calnan, REIV President, suggested the market could cool down when the market reacclimatises to a world without the HomeBuilder scheme and loan deferral periods.

Even so, the big banks predict double-digit annual growth in the housing market over 2021, meaning Melbourne house prices may keep flying past the seven-figure barrier.

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