Melbourne’s housing market performed solidly over the final three months of 2012, with the median house price rising by 2.4 per cent to $526,281.

The unit market also recorded a positive result for the December quarter with the median price rising 1 per cent to $390,651, the first rise in unit prices since the March quarter 2011.

The broader picture reveals that Melbourne’s median house price increased by 0.5 per cent over 2012. But unit prices were down 2.2 per cent.

This positive house median result was mainly due to the activity of value-seeking buyers in prestige suburbs such as Toorak, Middle Park and Malvern over the latter part of the year, along with first home buyer demand earlier on.

While a rising sharemarket and historically low interest rates will continue to encourage buyer momentum in Melbourne’s prestige suburbs, concerns over the state of the local economy – particularly in regard to unemployment levels, job security and cost-of-living increases – will act as a brake on budget and middle-market buyer activity.

Expect median house price growth between 0 and 3 per cent over 2013.

Dr Andrew Wilson is senior economist for Australian Property Monitors, a Fairfax-owned subsidiary. Twitter: @DocAndrewWilson

Posted by Andrew Wilson – Domain (The Age) on 10th February, 2013