Melbourne house rents jumped by $15 (3.5 per cent) over the quarter to a new record high of $445 a week according to Domain’s latest Rental Report.
This is the first quarterly increase since September 2020.
Despite the rise, Melbourne remains Australia’s most affordable capital city to rent a house, recording the weakest annual growth of all the capital cities, at 1.1 per cent.
Melbourne unit rents increased another $5 over the quarter to $375 a week, they remain $55 below the March 2020 high.
This is the first time in almost five years unit rents have recorded two consecutive quarters of growth.
Melbourne house rents have recouped all the COVID price dip to hit a new record high, this has resulted in a record price gap between houses and units.
Melbourne’s rental market has edged into recovery with asking rents once again on the rise.
This is the first time both house and unit rents have increased over a quarter since pre-pandemic March 2020 according to Domain.
Dr. Nicola Powell, Domain’s Chief of Economics and Research said:
The city has battled extensive lockdowns, driving many Melburnians to become COVID escapees. International border closures have hampered overseas migration and foreign student numbers, plummeting rental demand.
Influencing the recovery in rents has been a combination of weaker investment activity and some investors selling, the resumption of short-term travel, a shift in tenants to more affordable inner-city rentals, and greater household formation.
However rental conditions are far from uniform.
While tenants have the upper hand in the CBD and close to universities where vacancies are high, it’s become a landlords’ market further in the suburbs.
Dr. Nicola Powell, Domain’s Chief of Economics and Research suggested:
Now could be the opportune time to secure a deal in inner-city areas that have seen a significant drop in asking rent but still have elevated vacancies.
Once international borders reopen, rental demand will spiral, particularly in Melbourne which has historically welcomed more overseas migrants.
Australia is amid a skills shortage, a targeted migration approach from the government will be one lever to plug this gap.
The return of overseas migrants, international students, and particularly skilled highly paid migrants will add to rental demand.
Weaker investment activity interrupted the flow of rental properties over the last few years.
However investors are back in the market with the share of home loan values for investment reaching the highest since 2019.
This will boost rental supply moving forward.
No doubt competition to secure a rental will escalate once borders reopen and international students, new migrants, and expats look for accomodation.
This will then be further strained by demand from COVID escapees as they return from sea and tree change areas to the Melbourne suburbs.
Source: Domain Rental Report