Melbourne’s rental market continues its remarkable streak of elevated prices, maintaining record-high asking rents for both units and houses, according to the latest industry reports. As tenants face "pretty intense conditions" and limited options, real estate developers and agencies are closely watching these dynamics, with leading master property agency Axtra Property observing significant opportunities for strategic development within this high-demand environment.
The September quarter data reveals Melbourne's median unit asking rent firmly at $575 a week, up $25 from a year ago, while house asking rents remain at a steady $580 a week. These figures, consistent with the previous quarter, underscore a market where rents have plateaued at historically high levels rather than receding.
"Melbourne remains a landlord's market," states a market analyst, echoing the sentiments of industry experts. The city's rental vacancy rate hovered at a tight** 1.4% in the September quarter**, a marginal increase of 0.1 percentage points year-on-year but still far below the 3% considered indicative of a balanced market. This scarcity of available properties, particularly quality listings, continues to fuel competition among renters.
The Drivers Behind Sustained Demand
The current market landscape is a direct consequence of several converging factors. Following the relaxation of international border restrictions, Melbourne experienced a rapid population influx. This coincided with a behavioural shift observed during the lockdown years, where tenants moved out of share houses to live independently. When the population surged, the city found itself with fewer people per household and a reduced supply of available homes, pushing rents higher.
Brendan Coates, Grattan Institute housing and economic security program director, points to increased demand for housing driven by the rise of working-from-home arrangements and the return of migration as primary factors. While more homes have been built in Melbourne compared to some other cities, mitigating even faster rent increases, the current high levels represent a significant financial strain for many tenants.
Navigating a Competitive Landscape
The impact on tenants is palpable. Many have had to revert to house shares, seek out more affordable suburbs, or opt for units over houses. "The demand for well-located, quality residential properties across Melbourne is undeniable," comments a representative from Axtra Property, a master agency with extensive experience in the Melbourne market. "We observe first-hand the intensity of competition for desirable rentals. This sustained pressure underscores the critical need for new, strategically developed housing projects that meet the evolving needs of Melbourne’s growing population."
Future Outlook: The Imperative for New Supply
While some areas have seen minor adjustments, such as inner Melbourne unit asking rents inching down by $5 a week or Mornington Peninsula properties falling by $20 in three months, overall, rents are holding firm. The expansion of government schemes like the 5% Deposit Scheme aims to assist first-home buyers, potentially easing rental demand by transitioning renters into homeowners. However, experts debate the net effect on rental supply if these buyers outbid investors.
There is a consensus, however, that a concerted state government push to build more housing is the most viable long-term solution to slow rent growth, though this will naturally take time to materialise.
For real estate developers and agencies, Melbourne’s enduring rental surge signals a robust and receptive market for new projects. The challenge lies in understanding the precise pockets of demand and delivering properties that align with current tenant needs and expectations in this highly competitive environment. As a key player in Melbourne’s property landscape, Axtra Property remains at the forefront, leveraging its deep market understanding to identify and facilitate opportunities that contribute to the city's future housing supply.