More than 1000 homes with be auctioned today. Source: News Limited
HOUSE prices could hit record highs within weeks as Victoria rides a property boom.
More than 1000 homes will be auctioned today as experts predict results will soar above a $505,000 median price.
Record low interest rates are driving heated competition as first-time buyers and investors battle at auctions.
RP Data property specialist Robert Larocca said Melbourne would see a new peak in house prices if September's 2.6 per cent increase in house values were repeated this month.
"Our previous peak was $505,000, so if we reach that we'll be heading into new territory," Mr Larocca said.
Bentleigh East will be awash with house hunters today: 20 houses are up for auction. Reservoir and Glen Waverley each have 18 properties on the block.
Some homeowners in popular suburbs saw a 16 per cent leap in value in the past year.
Real Estate Institute of Victoria chief executive officer Enzo Raimondo said October was due to have about 4500 auctions, on a par with May 2010, which holds the record for the greatest number of auctions.
"There is also the possibility that we could break this record.
"With clearance rates currently averaging above 70 per cent, there is no doubt that there is a strong influx of demand in the auction market," Mr Raimondo said.
Nationally, house prices have climbed almost 6 per cent in the past year, while unit prices have increased by more than 4 per cent.
The surge in property value has prompted concerns about a housing bubble that could burst under the pressure of unsustainable growth.
But analysts have tempered concerns, saying Australia was not yet in the midst of a property boom.
AMP economist Shane Oliver said low rental rates were serving as a healthy constraint on the market, despite cheaper mortgages.
"I would rather moderate growth in house prices than a return to boom conditions," Mr Oliver said.
"If house prices are coming up too fast it creates problems with a bubble and it encourages the RBA to raise rates earlier than they otherwise would."
Previously overlooked suburbs have emerged as dark-horse contenders as buyers look for affordable alternatives.
Mr Larocca said Bentleigh East provided an alternative to buyers forced out of nearby suburbs such as Brighton and Elwood.
"It's been apparent this spring in a very clear way with the number of auctions in Bentleigh East," Mr Larocca said.
Ray White Moorabbin Principal Kieran Lynch said a strong demand for properties under $800,000 combined with low interest rates and a shortage of housing stock had put the spotlight on the area.
"House prices in Bentleigh East have jumped at least 15 per cent in the past three months, so it's a bit of a hotspot right now.
"The sale price in Bentleigh East is about $750,000. The same house just a few months ago would've been around the early 600s," he said.
Mr Larocca said the clearance rate was expected to keep cruising above 70 per cent.
"When we look broadly across Melbourne we're seeing stronger clearance rates in the northern suburbs and the middle ring of the eastern suburbs," he said.
But he assured home hunters the growth in house prices was moderate at best as the market recovered from last year's lacklustre climate.
"If buyers are worried about strong market conditions and are staying out as a result, we don't have boom conditions in Melbourne at this point in time, so home buyers can continue to search and be happy they're not buying at the top of the market yet," he said.
angus.thompson@news.com.au
HOT SPOTS FOR HOUSE VALUE
(Percentage increase in median house price in the last year until the end of July- the Melbourne median growth is 1%)
Elwood 15.8%
Huntingdale 15.7%
Alphington 15.1%
Fitzroy North 15.6%
Yarraville 10.3%
Wheelers Hill 10.2%
Canterbury 9.6%
Thornbury 3.6%
Ringwood East 7.9%
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