There are 16 suburbs with a median house price above $2 million and another nine suburbs above $1.9 million, according to the latest Domain State of the Market Report.

The new data also shows that, across the city, 131 suburbs have a median house price above $1 million. In the last year alone, 71 suburbs have joined the once-exclusive club.

Toorak leads the prestige pack with a median house price of $4.37 million followed by East Melbourne at $3,932,500.

It is the first time East Melbourne has broken through the $3 million mark and its dramatic price increase reflects a string of remarkable sales in the tightly-held neighbourhood.

Domain Group chief economist Andrew Wilson said the suburbs joining and leaving the club could fluctuate from quarter to quarter due to the number and types of properties being sold.

"It's a very narrow field in Melbourne, the $2 million club, we're only talking a handful of suburbs," Dr Wilson said.

Paul Caine, a real estate director who has worked in the suburb for two decades, said the small number of houses that are listed in East Melbourne each quarter often sell for between $4 million and $5 million.

"The last cheap house was $2.65 million," Mr Caine said. "That's politely referred to as entry-level."

He described the suburb's property market as stable and expensive to enter, but a "safe place to park capital for the long term".

Mr Caine said residents aged in their 60s and 70s were selling terraces and mansions, and downsizing to luxury apartments in the area.

Within the prestige market, the solid growth within the past year has been twofold. Firstly, suburb median prices can be lifted by the hefty sums developers are willing to fork out for large blocks of land they can subdivide and make a neat profit from.

And secondly, swarms of ageing baby-boomers are downsizing, thus large family homes in the city's most coveted neighbourhoods are consistently being listed on the market.

Buxton's Peter Hickey said Hampton, a bayside suburb bordering Brighton and Sandringham, was a prime example. Its median house price has, for the first time, exceeded $2 million.

Mr Hickey said many downsizers wanted to stay in the area, and quality villas or apartments were now fetching well above $1.5 million.

"It's highly sought after by people who haven't lived here ... and the people who have lived here never want to leave," he said.

"It's like a game of musical chairs and there's not enough chairs out there."

Dr Wilson said it was difficult for buyers to get a foot into the above $2 million market.

"Price rises are forming a barrier to entry for buyers, particularly those buyers that are trading up into these areas," he said.

"In this sort of stratospheric price range, it's very much a market that's characterised by those who are established in ultra prestige."

At the other end of the market, suburbs knocking on the door of the $1 million club include the inner north outliers Coburg and Preston, with medians hitting $990,000 and $950,000 respectively.

Harcourts Preston Real Estate owner Paul Castello said he had seen Preston's median go from $100,000 to nearly a million in 20 years, and put it down to the migration of buyers from the inner city.

"It still offers everything the inner city offers," Mr Castello said. "It's well serviced by everything, transport, the market - people come from far and wide to the Preston Market."

Dr Wilson said the once industrial suburbs would continue to grow.

"The prospects for areas such as Coburg and Preston are very, very strong and they will be in that million dollar club sooner rather than later," he said.

Other suburbs with medians over $950,000 for the first time in the past year include Maribyrnong, Ringwood North, Spotswood and Heatherton.

- With Brendan Bale