Melbourne's northeastern suburbs defy downturn

The Real Estate Institute of Victoria (REIV) said three-bedroom homes in Melbourne's northeastern suburbs had increased in value by 1.2% over 12 months and 5.5% quarterly until December 2008. Overall, Melbourne houses suffered drops of 9.7% in annual and 0.9% in quarterly median values, according to REIV.

"Positive capital appreciation can be found if you look at the detail," said Enzo Raimondo, CEO of the REIV. "Three-bedroom homes in the northeast were the most popular housing type and location in the last quarter."

Two-bedroom houses were also showing recovery. In the north, two-bedroom homes had fallen 6% over 12 months, but in the most recent quarter increased by 4.3%. A similar increase could be seen with three-bedroom homes in the north, up 4% for the quarter.

Meanwhile, some of the largest falls were recorded in the inner city, inner east and inner south, said Raimondo.

"It's no coincidence that the areas experiencing good growth are the parts of Melbourne priced at or below the metropolitan median," he said. "Buyers, particularly first homebuyers, are looking for value and that's driving price increases in the north and northeast."