Ben Peters has been saving for 10 years to buy his first home. But he is continually disheartened by soaring house prices that keep his dream of home ownership out of reach.

Melbourne house prices have risen every quarter for four-and-a-half years, with the latest $32,000 jump pushing the median to a record $843,674, the Domain Group’s State of the Market report, released on Thursday, shows.

The median is more than $110,000 higher than this time last year, and has more than doubled in a decade; in 2007, it was $386,411.

“Seeing the prices go up caused me to doubt all the hard work I had put into getting into the market,” said the 27-year-old physiotherapist, who worked full-time for the past decade and recently completed a master’s degree.

“I questioned what was the point of working hard; I felt like giving up and just enjoying the moment, it really puts you in a pessimistic mindset.

“Even after 10 years of struggle and pain, it seems like it’s still a bit out of reach.”

Mr Peters watched prices go “through the roof” at auctions this year; a two-bedroom Eltham unit sold for about $630,000 after being advertised for about $500,000.

Melbourne’s unit median also shot up $55,000 over the year to a record $494,589.

The city’s population boom is a key driver of prices growth and higher rents are forcing would-be buyers to save longer for a deposit. Melbourne’s median weekly house rents rose $20 in the past year to $420. The median unit rent increased $15 to $395.

Rising house prices represent a gain on paper for homeowners, but many are not feeling particularly rich.

Brenda Sallows and husband Richard are downsizing, with their four-bedroom house at 8 Gawler Court, Mont Albert for sale. They bought the property 23 years ago for about $240,000, and are now expecting $1.6 million-$1.7 million.

Brenda and Richard Sallows Photo: Eddie Jim

Mrs Sallows believed the market was “extremely buoyant” so it was a good time to sell. But she did not know if they could afford what they wanted in the same area.

“That’s the only problem — when your house [value] goes up, so does everything else you’re trying to buy,” she said. “The ultimate aim is not to have a mortgage or be as debt free as possible.”

AMP Capital chief economist Shane Oliver said higher prices meant people had to borrow more, which added to worries about the level of household debt.

“They’re certainly not welcome numbers,” Dr Oliver said. “The only people who this is good news for are those who are looking to sell … and move out of Melbourne into regional areas or to cities and states which haven’t seen the gains in recent times.”

Brisbane and Perth were the only cities to record a median house price fall over the quarter.

Melbourne’s December quarter median was revised from $795,447 to $811,515 because of a lag in private sale data collection.

Domain Group chief economist Andrew Wilson said the stamp duty cut for Victorian first home buyers had potential to create a ripple effect through the market.

Fletchers‘ Tim Heavyside said some buyers were “a bit frantic”, believing they might pay more if they missed out and bought later. Frustrated buyers could pay an emotional price, rather than a logical price, he said.

Hocking Stuart‘s Scott McElroy said the challenge for first-timers was they wanted to live where they had been renting, and were not prepared to live in a small apartment or move out of town to find better value for money.

ANZ head of Australian economics David Plank said removing stamp duty for first home buyers would only increase house prices, and policies that artificially boosted demand should be avoided.

Moves to tighten investor lending standards and increased interest rates for investor loans could have some impact on the market, he said.