Mortgage Interest rate rise may be the only way to cool property market as Melbourne house prices soar

A mortgage interest rate rise may be the only way to slow Melbourne's rapidly increasing house prices, says the Real Estate Institute of Victoria (REIV).
REIV chief executive officer Enzo Raimondo said Saturday that Melbourne's median house price increased by 3.9 per cent in the September quarter to $431,000.
"Over the past year the median house price in Melbourne has increased by 13.1 per cent or $50,000, the largest dollar increase we have seen in a twelve month period," Mr Raimondo said.
"This confirms the worsening affordability of housing in much of Melbourne," he said.
The median price for an apartment or unit rose by 5.1 per cent in the quarter from $350,000 to $367,750.
Mr Raimondo said future increases in Melbourne house prices could slow if the Reserve Bank increased the official cash rate in November.
"Last time the Reserve Bank introduced two rate rises in quick succession it stopped the market in its tracks," he said.
"There's talk of that at the end of the year.
"That will be the only thing that will stop the market."
The REIV said the high demand for affordable properties had been highlighted by the fact that house values in the more affordable suburbs in Melbourne had increased by 25 per cent in the September quarter.
"Sunshine (in Melbourne's west) is an example of an affordable suburb which has increased in value dramatically," Mr Raimondo said.
"Its median increasing by $95,000 in three months from $240,750 to $335,000 or 25.9 per cent.
"In the more expensive (eastern) suburb of Malvern we saw the highest appreciation in the quarter, its median increased by 44 per cent, up $550,000 from $1,232,500 to $1,780,000.
The REIV said there were now 15 suburbs in Melbourne with a median price in excess of $1 million.
"New entrants to the list are inner-east and bayside suburbs, Camberwell, Beaumaris, Glen Iris, Malvern East and Brighton East," he said.
Australians for Affordable Housing spokesman David Imber said low and middle income earners were being priced out of the housing market in Melbourne.
With four weeks until the federal election the major political parties needed to outline strategies which would provide solutions to housing affordability, he said.
"These figures highlight that we do have a housing crisis in Melbourne," Mr Imber told Southern Cross Broadcasting.
"Despite the strong economy many people are missing out," he said.
"We do need to have a national housing plan to ensure that low and middle income Victorians do have a better future to look forward to."
Source: AAP