Why you should take a long-term view of Australia's fastest growing city

In the short-term, the cooling of the market along with the current state of lending is likely to have the risk of small price falls, Mr Peleg said.

“However, due to this strong population growth the Melbourne market has shown its resilience. As per CoreLogic, dwelling prices in Melbourne have increased by 3.7 per cent and in the past quarter they have declined by a very modest 0.7 per cent,” he said.

“It should also be noted that although there is, and has been, a very large supply of units, due to the outstanding population growth, the supply has been absorbed by the market.”

The medium- to long-term, however, if the high population growth is kept in mind, means that demand would be very high.

“Therefore, freestanding houses in the Western and Northern suburbs with reasonable access to the CBD are projected to experience solid capital growth in the medium to long-term,” Mr Peleg said.

“Due to potential problems with public transport systems and infrastructure in those outlying areas, townhouses and large apartments in small unit blocks that are well-suited for families, located in areas with good access to amenities and to the CBD, are also projected to enjoy long-term growth.”

That does not mean all property is a safe bet, as he warned that high-rise units and smaller units unsuitable for families meant higher risk, and the potential of harsher lending restrictions and changes to negative gearing could shake the market up considerably.

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