According to data released by the Real Estate Institute of Victoria (REIV), the Melbourne property market has continued its steady climb. The median house price in Melbourne has grown by another 1.5 per cent since the June 2006 quarter.

REIV chief executive Enzo Raimondo said if this trend continued Melbourne's median house price would return to the all-time high of $380,000 recorded in December 2003.

The growth in Melbourne house prices combined with yet another interest rate increase expected before Christmas may see more first home buyers opt for regional Victoria instead of Metropolitan Melbourne.

The planned reduction in the state government assistance for First Home Buyers will only add to the problem. The September Melbourne quarterly median price rose to $377,000 up $5,500 from a revised June quarter. Recent ABS data showed that first home buyers have reduced from 19.88 per cent of the local market in June to 17.76 per cent in August.

Further rate increases, taxes and charges and the planned reduction in the state government assistance for first home buyers in the middle of next year will only make it harder for young families to break into the Melbourne Property Market. Young families will be forced to consider regional areas for their purchase. Some of these areas have actually seen a drop in property prices. Geelong's median house price fell by 4.6 per cent and Ballarat's dipped 0.5 per cent.