The rental market in Melbourne usually slows down in the cold winter months, but it didn’t last year and our capital city has now recorded nearly two years in a row of persistent price growth.
COVID-19 Impact on Melbourne Renters
During COVID, renters had it good, but since then demand is up and supply is down and it’s driving up the portion of their paycheck they are having to splash out on rent each month.
Property owners have been taking the opportunity to lift rents to claw back some of their higher costs that have come in the form of higher interest rates, taxes, and the cost of living.
Melbourne’s median rental price now sits at $589 with a year-on-year increase of 9.6 per cent and it’s suburbs like Dandenong, Tullamarine-Broadmeadows, and Whittlesea-Wallan that have seen the sharpest spikes.
Regional and Outer Suburban Rental Price Increases
Across the nation, it’s the regional and outer suburban areas feeling it most. CoreLogic head of research Eliza Owen said this reflects the current cost of living crisis that’s making life difficult for those areas that are traditionally cheaper.
Factors Contributing to Rental Price Changes
Ms Owen pointed towards a normalization of overseas migration and increasing the ability of the construction sector to build more homes more quickly as ways rental prices could start to come off as winter approaches.
The high price renters are having to pay is forcing many to look for alternatives such as house-sharing apps and websites, which should start easing some of the upward pressure on rents.
PopTrack Rental Report Insights: Slowing Growth
In the recent PopTrack Rental Report for the March quarter, there are signs the growth is slowing, with median advertised rents across Australia rising by 3.4 per cent, down from 5.8 per cent in the same quarter this time last year.
With overseas migration still quite high and the construction industry struggling to get going, the market can expect rental price growth to continue this winter, but it certainly should be at a much slower rate than what we have seen over the last couple of years.
Domain head of research Nicola Powell said summer often sees an uptick in rental growth and the market could expect things to cool off now we have moved on from the warmer months.
