Expensive property falls but affordable suburbs are on the rise. Given the state of the economy, the latest REIV median house price figures have been eagerly awaited. The headline figure revealed that Melbourne's December quarter median was $426,000, a 0.9per cent decline for the quarter and a drop of 9.7per cent for 12months. The headline figure is an overall representation of the residential market and does not reflect the change in value to each individual property. In the December quarter 2007, 16.4per cent of residential property transactions were above $800,000. During the December 2008 quarter, this dropped to 11.8 per cent. Over the same period there was a reversal in the trend for more affordable property. The number of residential transactions at less than $500,000 jumped from 59.3per cent to 66.7per cent. The December quarter of 2007 signalled the end of the property boom that, at its height, brought an unprecedented level of transactions and unsustainable price growth. By the end of 2007, the subprime crisis kicked in, which quickly developed into the global financial meltdown of 2008. Our research shows that during the downturn in the economy and the associated decline in consumer sentiment, demand for property in Melbourne's more affordable suburbs increased while demand for more expensive property fell. This trend would also have been influenced by the increase in the first home buyer's incentives and the reduction in interest rates late in 2008. The result has been Melbourne's headline median decline, but there has been an increase in the median of more affordable suburbs and mid-tier suburbs such as Broadmeadows, Craigieburn and Rowville. Source From: SMH