Victoria’s competitiveness and prosperity is at risk from a house price surge being fuelled by supply constraints and a return to population growth since the pandemic, the Urban Development Institute of Australia has warned.

Ahead of what is expected to be a horror state budget next week, the institute on Monday released findings that show the average price of a 400-square-metre property in Melbourne’s growth corridors increased by 45 per cent to $855,000 in the five years to June 2023.