It joins other provincial cities of Ballarat and Geelong in enjoying higher price increases, with strong sales continuing in Melbourne in recent months.

REIV chief executive Enzo Raimondo said record low interest rates continued to fan the growth in property prices, with the REIV’s house price index (HPI) up by about 3.4 per cent in the past 12 months.

Mr Raimondo said the HPI was “a useful measure of market activity based on sales data”.

“It has reflected higher price increases across the three major regional centres of Ballarat, Bendigo and Geelong,” he said.

Bendigo reported the strongest growth in the past year with 6.5 per cent and Geelong with 6.4 per cent.  Ballarat had the weakest growth of the three regional areas with 3.4 per cent to May this year against May 2013.

REIV reports the rolling annual median prices, or 12 months to the end of May 2014, for Bendigo as $330k compared to the 12 months to end of May 2013, which was $310k.

In Ballarat, the rolling annual median prices were $300k for 2014 and $310k for 2013, respectively.

Geelong recorded $415k for the 12 months to the end of May 2014 compared to $390k in 2013.

Mr Raimondo said clearance rates were lower compared with Melbourne as there were far fewer auctions than private sales in regional Victoria.

Clearance rates for the five months to the end of May this year are Ballarat at 64 per cent, Geelong at 61 per cent and Bendigo at 51 per cent.

Unit and townhouse prices in regional Victoria have also showed solid growth, Mr Raimondo said.

The REIV calculated a Unit Price Index, reflecting activity in the sale of units, townhouses and apartments, as up by 2.7 per cent in the past 12 months.

“For investors in regional Victoria the news was also steady on the rental market,” he said.

“The vacancy rate across the state was stable at 2.5 per cent in May."

Median house rents in Victoria rose from $295 a week in April to $300 a week in May.

There was a $10 a week increase in Bendigo to $300.