Melbourne house prices have already passed their 2017 peak, leading to excellent results for sellers but also concern over the widening gap between those who own property and those who do not, property experts say.

CoreLogic’s house values index has Melbourne values above their peak by 0.3 per cent. The most recently available Domain data shows the city’s median house price – a separate indicator – was just 0.7 per cent below its peak in January.

Several other indicators suggested the February median has surpassed the city’s price peak of $908,734 in December 2017, Domain economist Trent Wiltshire said.

“The auction market has been very strong, February’s clearance rate was 72 per cent and the median auction sale price for Melbourne is $1.02 million in February, the highest point yet,” he said. “So it’s pretty clear Melbourne’s median house price is back above the 2017 peak.”

Mr Wiltshire said Melbourne was on track for a $1 million median by mid-to-late next year.

A combination of the Reserve Bank rate cuts and a loosening of credit restrictions caused a market rally late last year, which is continuing to drive the property market well into the first quarter of 2020.

UBS economist Carlos Cachos said the market was still tight, with sellers taking time to gain confidence to list.

“Demand is very strong and it takes supply some time to respond,” he said. “There’s no data up to the minute but every anecdote you see suggests we’re back to boom-time.

“We’ve put together a series looking at historical house price recoveries. In Melbourne it’s the equal fastest with the mid-80s recovery.”

It’s good news for sellers Ed Seaford and Deb Rees, who are hoping to fetch between $1.35 million to $1.45 million for their Californian bungalow at 78 St David Street, Thornbury.

78 St David Street, Thornbury VIC 3071 4 Beds 2 Baths 4 Parking View listing

They tried to sell a home in Ascot Vale last year which languished on the market but has since sold, and they said the change in the market was plain to see.

“It’s been chalk and cheese,” Mr Seaford said. “Not getting one offer [in Ascot Vale] really did knock our confidence.

“We’ve had a lot of interest, more than 100 groups through [St David Street], which is really encouraging.”

But they were concerned about what the hot market and approaching million-dollar-median meant for their efforts to buy a new home closer to the city, and for first-home buyers.

“It does make it tough for first-home buyers, I really feel for those guys.”

Mr Seaford had to sell his business to buy his first home in 2014.

Their agent, Nelson Alexander’s Ryan Currie, said it was much easier to sell in today’s conditions.

“The amount of properties coming up for sale is on the increase,” he said. “That’s a good sign of a market that people are confident in.

“Despite how good the market was in the last quarter of the year, people were still hesitant.”

Mr Wiltshire said the rapid price growth, which by all indications would be in double digits this year, would widen the gap between those who own property and those who don’t.

“Rapidly rising prices are not good for our housing affordability,” he said. “It’s becoming harder and harder for people to save a deposit, particularly with wage growth remaining weak.

“Rising prices obviously benefit home owners, as do lower interest [rates], but it creates a bigger barrier to home ownership.”

Deloitte Access Economics partner Nicki Hutley said the affordability crisis of a few years ago had returned.

“Politicians were quick to drop the problem when the property cycle turned down,” she said. “The decline was because of macro-prudential regulations and not a change of supply and demand in the market. It takes us back to exactly where we were, of how do we deal with the underlying crisis.”

The growth in prices could spike further if investors, still sidelined by unfavourable market conditions, jumped back into buying and selling, Mr Cachos said.

“The question is now do they use their increased firepower from low rates to come back into the market,” he said. “[But] if you do see a very strong pick-up in investor lending, you may see the regulators beginning to reintroduce macro-prudential restrictions.”