Sales of houses are mixed across the country with lower end markets faring much better than middle and high-end owners.
However the number of properties listed for sale slumped in both cities.
Real Estate Institute of Victoria head Enzo Raimondo said it was the decline in properties available for sale that had driven the recovery in clearance rates.
"We've seen a decrease in transactions right across the board," Mr Raimondo said. He said home owners had become unwilling to sell unless they were forced to.
"While we're seeing a lot of increased activity in the lower end of the market, the median to higher end where most of the action usually takes place has slowed down to a whimper," he said.
Market Intelligence Strategy Centre found that the value of new mortgage settlements rose 18.5 per cent to $46billion in the December quarter, suggesting the property market has held on despite the global financial crisis.
With unemployment set to rise this year, homeowners have welcomed the recent rate cuts. The Reserve Bank cut rates by a total of 400 basis points since September and home loan interest rates have come down by almost the same.