Leading the charge,the Mornington Peninsula region’s house price skyrocketed 11.2 per cent over the December quarter to a median $995,000,while unit prices rose 9.9 per cent to $632,000.

Melbourne’s south-east region,which includes Glen Waverley and the first-home buyer hotspots of Clyde North and Cranbourne North,closely followed,with house prices up by 9.4 per cent to $788,000 and units by 9 per cent to $570,000.

The outer east’s tree changer suburbs,including Ferntree Gully,Healesville and Yarra Glen,saw the house price median reach $1 million for the first time,up 5 per cent over the quarter.

The boom came as no surprise to agents,who dealt with the rush back to the market late last year.

Ray White Cheltenham’s Trevor Bowen said demand was so high that many houses sold prior to auction,while the length of marketing campaigns was cut from four weeks to just two or three.

And buyers were still rushing back in January,looking to find a new property,especially after many months in lockdown.

“We call it ‘COVID clarity’,” Mr Bowen said. “Being in lockdown clarified what people wanted in a home – either it was too small or too big for them.”

Tara and Steve McCormack were clear on what they wanted when they bought a smaller townhouse in Beaumaris in December.

The couple is auctioning the Cheltenham home they have lived in with their now-teenage children for the past 16 years,to move to a property with a much smaller garden.

“We were quite conservative,we weren’t going to sell and then look for a place during COVID-19,” Ms McCormack said.

She said that although they had been watching the market,the move for them was more about moving into the next phase of their lives. They had bid at other auctions where townhouses had sold for well above the advertised price.

“The reason we felt we could go and bid was because we had our finances in place. But I do feel for anyone trying to get into the market right now.”

While the Melbourne market did have a strong final quarter for the year,its annual rise was significantly lower than the other state capitals,with the exception of Perth.

Westpac senior economist Matthew Hassan said the impact of COVID-19,including the lockdowns and lack of new migrants,had weighed heavily on the Melbourne market.

“If you had this house price gain in any other year in Melbourne you’d be popping champagne corks,but because everywhere else has done so well it’s almost like it’s a doom and gloom story,” he said.

And while price increases had been strong,Mr Hassan said that buyers and sellers shouldn’t expect that to continue. He suggested prices were likely to moderate and may even fall by the end of 2022,with interest rate hikes predicted in August.

“One of the things that is shifting is the interest rate backdrop,” Mr Hassan said.

“Last year we had record-low interest rates and fixed interest rates[helping people borrow more] and that has started to shift already.”

Figures quoted are based on Domain data from its Quarterly House Price Report,released today. CoreLogic has Melbourne’s median house value at $997,928 by December,using a method that measures the value of the specific housing market based on the attributes of properties that are transacting,such as land size or number of bedrooms,instead of calculating a stratified median pricebased on sales,as in the Domain data.