Melbourne’s house prices are tipped to level out in early 2015 after growth last year remained strong and steady.
House prices in Melbourne grew 0.6 per cent in December dropping from the 1 per cent growth in the previous quarter.
Domains House Price Report for 2014 house prices overall grew 3.4 per cent to a median of $610 470.
Median unit prices showed more life in the last year with a 2.9 per cent growth to $431 419.
The Australian Bureau of Statistics shows that the total value of home loans approved in Victoria dropping 9 per cent in November making marking its lowest value since April 2014.
Domain Group Senior Economist Andrew Wilson said "although a cut in interest rates will help affordability, it will work its way against concerns over job security and subdued incomes growth," he said.
"I don't think it will activate enough pent-up demand to achieve prices growth because the counter force will be concerns over the economy."Dr Wilson believes that house prices will grow anywhere between 2 to 3 per cent this year but is also mindful that the prediction is subject to how the economy pans out.
He believes that there is a potential oversupply of apartments in Melbourne’s central business district and this could lead to an inaccurate growth rate but said demand from first home buyers and investors would remain strong.
Nelson Alexander Sales Director Arch Staver told
Domain last year’s market was affected by developers with an "insatiable appetite" for corner allotments and disused warehouses and were being used for redevelopment.
He said low supply early last year created competitive auctions but it turned around in the latter part of the year.
"Last year there were many more buyers than there were houses for sale, but we saw that start to shift in spring as more properties came onto the market," he said.
"The clearance rates started to drop, the prices were nowhere near what some of the houses were achieving earlier in the year."Mr Staver believes the market will continue to cool creating a confidence in the buyer market.
"That should send out a message to buyers that they're now playing in a sensible field," he said.
"I don't think they're going to want to be caught up in bidding wars or any sort of aggressive buying behaviour."Sydney remains the biggest mover with a 14.1 per cent increase in house prices in 2014.