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Prices for residential property across much of Australia are continuing to rise, with Perth and Melbourne now recording a higher median than Sydney for apartments, according to September quarter price data released this week by the Real Estate Institute of Australia (REIA).

In Melbourne, prices for both houses and other dwellings (flats, units and townhouses) are rising rapidly as the city's population continues to grow strongly. There was a 5.1 per cent increase in houses to $431,000 in the September quarter, and a 9.9 per cent increase over the year.

Other dwelling prices also followed suit, with a 5.1 per cent increase over the quarter to $367,800, and a 13.9 per cent increase over the year.

Adelaide and Hobart also performed well in the September quarter, with both reporting a 2.3 per cent increase in prices to $320,000 and $317,000 respectively. This represented a 10.7 per cent annual growth for Adelaide and a 9.3 per cent annual growth for Hobart.

The market is steadier in Sydney and Perth, although these two cities have the highest prices for houses in Australia.

Sydney saw a modest recovery this quarter with 1.5 per cent growth in house prices to $538,400 (a 3.4 per cent increase over the year).

There was a slight fall in Sydney other dwelling prices, down 0.9 per cent to $360,900, with no change recorded in the median price over the year.

Perth has seen a slight recovery in the September 2007 quarter. While its median house price increased by just 0.7 per cent to $455,000, prices for other dwellings were stronger, with a 2.8 per cent quarterly growth and an 8.8 per cent annual growth to $370,000.

Like Perth, Darwin house prices have not shown much growth in the quarter, up 1.3 per cent to $400,000 (a 3.9 per cent increase over the year). Other dwelling prices however have skyrocketed, with a 14.6 per cent quarterly increase to $320,000 (a 28.3 per cent increase for the year to September 2007).

Canberra was the only capital city to experience a slight decline in house prices in the September quarter, down 0.4 per cent to $425,000, the REIA report shows, although this is still 8.1 per cent higher than the corresponding quarter last year.

Other dwelling prices in Canberra were up 3.3 per cent over the quarter to $346,000, a growth of 11.0 per cent over the year.

REIA President Noel Dyett said that despite rising interest rates, the availability of housing finance and a relative under-supply of housing resulted in steady growth in the housing market during the quarter and the year to September 2007.

"For the first time, both Perth and Melbourne recorded a higher median than Sydney for other dwellings in September", Mr Dyett said.

"The upward movement in prices for other dwellings suggests that many home buyers are considering medium and higher density housing as more affordable options in a market where affordability is very low."

Mr Dyett attributed this to population growth driven by immigration, skills shortages in the construction sector, land release issues, and investor preference for other asset classes.

Median prices are not yet available for Brisbane. These will be published in the Mortgage Choice/REIA Real Estate Market Facts report, together with a comprehensive analysis of median prices, median rents and vacancy rates for all capital cities in December 2007.