Melbourne's property values creep up ahead of RBA cut

MELBOURNE's median house price has unexpectedly bounced back by $18,000 in the past five months.

MELBOURNE's median house price has unexpectedly bounced back by $18,000 in the past five months.

Units have largely led the charge, recording 4 per cent growth in the last quarter to a current median of $417,500.

But houses are closing in, according to RP Data's research director Tim Lawless, with median prices rising 2.8 per cent in the same period to $507,700.

"Melbourne home values fell by 10.5 per cent between October 2010 and May 2012 after rising by 36.7 per cent between the start of 2009 and the market peak," Mr Lawless said.

"Since the May trough, Melbourne values have recorded a 4 per cent surge which is the largest recovery so far across all the capital cities."

Mr Lawless said yesterday's RBA cut would bolster confidence but he warned growth couldn't continue at such high levels.

"I wouldn't be surprised if we did see a further uptick in consumer confidence . . . (but) I'd be pretty surprised if we did see Melbourne prices increase by the same figure on a month-by-month basis," he said. "But it does certainly look like Melbourne has turned a corner."

Rob Larocca from the Real Estate Institute of Victoria said if banks passed on the cut it could help encourage more buyers off the sideline.

"When combined with overall improved affordability it will also help bring more buyers in from the sidelines in 12 remaining weekends for auctions this year," Mr Larocca said.

Richard Wakelin, director of Wakelin Property Advisory, said while any growth was good news for home owners he did not expect prices to rise dramatically.

"I don't see that we are going to see a dramatic run in price growth.

"I think it is telling us the market is stable," Mr Wakelin said.

Nationally, property values rose 1.4 per cent in September, the biggest month-on-month jump in two years, to a $450,000 median.