Residential prices in Melbourne will see continuous growth next year due to increasing demand from investors and end-users, according to property consultants. PRD Realty said home values in Melbourne had increased by 2 to 3 per cent over the past six months but the prices still lagged behind cities such as Sydney. The selling price of a 900 to 1,000-square-foot apartment is pitched at A$230,000 (HK$1.2 million) or upwards and investment yields range between 4 and 7 per cent. Favourable factors such as the interest rate cut and increasing investment sentiment boosted by 'Olympic 2000' have not yet been fully reflected in the Melbourne residential sector. That would fuel a continuous increase in Melbourne's residential market, although it was difficult to make an estimation of the growth rate, PRD said. The property consultant said investment sentiment in real estate markets in Australia's main cities was growing after Sydney's successful Olympic bid. PRD Realty said in its latest monthly report that substantial interest in the inner- city residential apartments continued with the launch of several projects in the past month and the strong demand for well-located units. For instance, a residential conversion of a three-level building at 90 Collins Street, the Bank Apartments, had nine of the 11 units sold on the first weekend of marketing. Some analysts were concerned that there would be an oversupply of residential areas in Melbourne in view of the large number of planning applications.