Rent prices for houses in Melbourne have fallen for the first time in 7 years, with new data showing that the median price has fallen by 2.3% to approximately $430 in the last 3 months. The fall was attributed to a larger number of transactions at the cheaper end of the market across all suburbs. This has brought down the rental median overall.
The drop in rental prices comes after 5 years of consistent growth, which saw rental prices increasing by an average of 13% around Melbourne. Although house rents have dropped, weekly rents on units have risen by around 2.4%, which makes the median rent for a unit only slightly cheaper ($10) than the average rent for a house.
Ongoing Demand for Rental Properties
Consistent growth of the population in Melbourne, which has remained at around 2.6% a year since 2013, has created a regular and growing requirement for properties available to rent in the city. This demand has also seen a low vacancy rate in the area. Despite the reduction rental prices for houses in Melbourne, there were areas where rents on units and houses rose during the quarter.
For instance, houses in the North West, in areas like Essendon and Keilor saw a rise of around 2.5% per week, to $410 per week. There’s also been a slight rise in median house rents of 0.8% in areas of inner Melbourne. Although rents have increased in the northwest and inner regions of Melbourne, all of the other regions of Melbourne remain unchanged. However, these areas saw stronger results compared to the figures of June 2018. For instance, Mornington Peninsula homes saw a rent increase
of 5% over 12 months. Additionally, locations in the inner south like Hampton and Brighton saw an increase of 4.8%.
Changing Rent Prices in Melbourne
Interestingly, Brad Teal Real Estate’s director, Brad Teal noted that renters within the North West of Melbourne are beginning to focus more on newer homes. Rents are dropping more significantly in older properties because they don’t have certain features that today’s homeowners are looking for.
Mr. Teal noted that his agency has been re-educating landlords on how to invest in their investment property with new updates. Other consultants have suggested that renters within the inner Suburbs were searching for bigger homes, but there was a shortage in those kind of properties available. Real estate companies might be struggling to find the kind of houses available that today’s renters want to invest in.
Notably, couples appear to be willing to way a premium at the moment to rent homes in areas like Richmond, with some units renting at much higher prices.