Latest figures show it reached $318,000 for the year ending November 30, 2014.

The growth in the median house price stemmed from competition and a demand for more housing, according to Real Estate Institute NSW Orana division spokesperson Rod Crowfoot.

"The growth is testament to the market seeing ongoing demand in all camps and on that basis we can expect to see it grow."

Mr Crowfoot said it would be interesting to see what the impact of increased building activity would be.

"A lot of extra stock is being added to the market, a huge amount of building has been going on," he said.

"It should alleviate some of the pressure there and in the rental market."

But two-bedroom residences remained in short supply at Dubbo, Mr Crowfoot said.

"Very much so, in some parts of town you can still build them but the better quality, high-end ones aren't being built for the rental market, rather, they're being pitched at retirees and owner-occupiers."

The 9.7 per cent increase in median house prices from 2013 was "very solid" and reflected "the strength of the Dubbo and the general under supply of residential properties for sale", according to Dubbo real estate agent Bob Berry.

"The strong demand continues to push prices higher, on a lower volume of sales," he said.

"Only 599 homes were sold in the year to November, according to the report released last week by Australia Property Monitors."

The median house price had increased by an annual average of 4.7 per cent during the past 10 years.

Median unit prices went in the other direction during 2014, registering a 5.7 per cent drop to $213,000.

This easing did little to dent the long-term growth in unit prices however, recording a 10-year annual growth rate of 4.7 per cent. There were 51 unit sales for 2014.

Days on the market continued to fall, with units taking 50 days to sell and houses 62.

APM reported the rental return of a house was 5.7 per cent and 5.6 per cent for a unit, based on the current median sale prices and median rents of $330 and $230, respectively.

According to Mr Berry, the Dubbo housing market was ideal for investors wanting to take advantage of the high yields.

"Residential investments in Dubbo for a number of years have been beneficial," he said.

"The continuing low interest rates and improving rural conditions point to a buoyant year in the residential housing market in Dubbo.

"Lower interest rates enable people to take out a mortgage.

"It's an encouraging time for people to enter the housing market."