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

Australia becoming a 2 tier real estate market as Melbourne's one million dollar median home price suburbs double to seventeen

Melbourne now has seventeen one million-dollar suburbs, more than double the number at the start of the year.
The booming housing market means the likes of Balwyn and Surrey Hills are joining the property elite of Toorak and Brighton as having median price tags of more than $1 million.
Real Estate Institute of Victoria figures show that sales in the three months to the end of June produced nine more million-dollar suburbs, compared with eight in the first quarter of this year.
REIV chief Enzo Raimondo said the middle and the top end of the Melbourne homes market were going strong.
"I don't remember the $500,000-and-up market being this strong," Mr Raimondo said.
While housing affordability continues to worsen, especially for those trying to enter the market, it seems there is plenty of money to spend on property in eastern and beach suburbs of Melbourne.
The median value of Hampton homes jumped 23.8 per cent to put it in the $1 million bracket in the June quarter.
A renovated, four-bedroom clinker brick home in Littlewood St sold on Saturday for $1.855 million, stunning agent Stephen Wigley, of Hodges in Sandringham.
With a starting price of $1.35 million, Mr Wigley expected to secure a sale close to the reserve of $1.5 million.
"But a gentleman... started the bidding at $1.5 million," he said.
The Hampton area had been undervalued for some time and the quality of homes and its location would ensure more high prices would continue, Mr Wigley said.
Kay and Burton managing director Gerald Delaney said it had been the busiest winter for sales.
In the past year, the estate agent had sold properties worth at least $1 million in 23 suburbs, Mr Delaney said.
On Saturday, Kay and Burton sold a four-bedroom townhouse in Glen Eira Rd, Elsternwick, for $1.195 million.Source: Herald Sun