The median house price in Melbourne grew by 3.1 per cent over the course of the September quarter, outpacing the market of the rest of the country and taking the average to $773,669.
This is according to the findings of the latest Domain House Price Report, which revealed that the city is continuing to perform strongly on the back of a four-year growth streak.
With the median house price inching closer to $800,000, two official interest cuts allowed buyers to stretch themselves further.
Fewer houses on the market have been creating as much competition as they have in Melbourne.
If this performance is improved over the final quarter of 2016, then the median house price could reach or even surpass the $800,000 before the end of the year.
This would be particularly impressive considering the fact that the median only topped $600,000 two-and-a-half years ago.
Only Sydney has a higher median average house price at $1,068,303 - and its growth of 2.7 per cent in the September quarter is second to that of Melbourne.
The annual house price growth of 9.1 per cent in Melbourne surpasses the equivalent figure of 2.1 per cent in Sydney more than four times over.
Domain Group chief economist Andrew Wilson said: "The house median is pushing almost inevitably towards $800,000, maybe even this year.
"Even though Melbourne still has a reasonable way into the market for first home buyers, this could never be good news."
The inner city was the only part of Melbourne where a fall in house prices was recorded, dropping by 2.3 per cent over the third quarter.
Adjustments in the prestige market after a strong autumn was cited as the probable cause of this trend by Mr Wilson.
"There's no doubt that lower and middle-priced suburbs are marching onwards," he remarked.