Melbourne’s median house price has broken the $700,000 barrier for the first time amid a cool change in the market.

The new median – $707,415 – follows a solid September quarter in which house prices jumped 2.8 per cent, according to the Domain Group House Price Report released on Thursday.

The quarterly increase brings the year-on-year growth to 15.6 per cent, or $95,220, the highest annual result since June 2010.

Dr Andrew Wilson, Domain Group senior economist, said the local market was easing from a very strong June quarter when prices growth peaked at 6 per cent.

Last Saturday’s auction clearance rate at 73 per cent was the lowest result for this year, and follows a downward trend over the past two months.

House prices continue to outstrip apartments, which grew 1.9 per cent over the September quarter to a new median of $435,674.

The best-performing region for houses was the inner south, where the median climbed 6.1 per cent over the quarter to $1,108,527.

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House prices in the north-east have also risen 5.6 per cent, followed by the north at 4.4 per cent.

Kate Symons is selling her extended 1920s house in Northcote at auction on Saturday.

She and her husband have renovated 101 Thomson Street over three years from a decrepit cottage into a contemporary four-bedroom home.

Mrs Symons said they had seen many young families move into the area over the years, while older residents moved out.

“We have seen house and land prices go up quite significantly in that time, particularly the last two years,” she said.

Mrs Symons said they recently found a new property nearby and hoped to take advantage of the buoyant market.

Sam Rigopoulos, of Hocking Stuart Northcote, said many vendors of good properties, tossing up whether to sell for years, were finally letting go.

He said trophy homes in the eastern and bayside suburbs were also coming onto the market.

“I think that in itself, regardless of market forces, is always going to naturally lift the median when you’ve seen those sorts of properties coming on,” he said.

Mr Rigopoulos said there was strong demand for fully-renovated turnkey properties in Northcote, and they were difficult to find. But when they became available, he said they overshot their mark very, very strongly.

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Dr Wilson expects prices growth to continue to moderate over the December quarter.

He does not expect “a real kick to the market” even if there was another interest rate cut in November.

ANZ senior economist David Cannington said that in recent weeks they had seen moves by Westpac to increase their mortgage rate and the lagging impact of macroprudential measures weighing on investor sentiment and sales activity.

“The growth we’ve seen over the last couple of years is going through a period of sharp adjustment, where we won’t continue to see the growth rates over the next year that we’ve seen in recent years,” he said.

Mr Cannington expected the annual house price growth over 2016 to be between 2 and 5 per cent.