Vacancy Rates Rise

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A Potential Reprieve for Melbourne Renters

22 May 2024

The rental market in Melbourne has been facing a crisis defined by soaring rent prices, limited availability of homes for lease, and owners opting to sell their investment properties. However, recent data suggests that there may be a glimmer of hope on the horizon for struggling renters. 

According to research conducted by PropTrack, Victoria's rental vacancy rate has shown improvement for two consecutive months. In April, the vacancy rate stood at 1.22 percent, marking a 0.07 percentage point increase from March. While this increase may seem modest, experts believe it could signal the beginning of a much-needed reprieve for renters. 

The current rental crisis in Melbourne has been driven by a combination of factors. Rising rent prices have placed a significant financial burden on renters, making it increasingly difficult for many to secure affordable housing. Additionally, the limited availability of homes for lease has further exacerbated the situation, leading to fierce competition among renters vying for the same properties. 

Owners putting their investment properties on the market for sale has also contributed to the scarcity of rental homes. As property owners capitalise on the strong housing market, they are choosing to sell their rental properties, thereby reducing the overall supply of available homes for lease. 

Interestingly, the challenging rental market conditions have prompted a number of renters to consider purchasing their own homes. The desire for stability and the prospect of building equity have motivated some renters to make the transition from renting to homeownership, despite the hurdles they may face in the process. 

Marshall White's Property Management team has observed the varying demand for rental properties across different areas of Melbourne. While the overall demand in April and May was not as high as in previous months, it is important to note that demand fluctuates depending on the specific location. 

Open houses held on weekends provide valuable insights into the current state of the rental market. Some properties have reported zero attendance, indicating a potential slowdown in demand. However, on average, most open houses have attracted two to three groups of interested renters.  

The Boroondara area, in particular, has emerged as a popular choice among renters, with apartments in the price range of $500 to $650 per week, along with three-bedroom homes, garnering the most attention. These properties have seen an impressive turnout, with 14 to 20 groups attending open houses. 

For renters, the slight improvement in vacancy rates may provide a window of opportunity to secure a rental property with less competition. However, it is essential to remain proactive in the search process and be prepared to act quickly when a suitable property becomes available. 

Owners, on the other hand, may need to reassess their strategies to attract and retain renters in the current market conditions. Offering competitive rental rates, flexible lease terms, and well-maintained properties can help rental providers stand out in a market where renters have more options to choose from. 

As Melbourne navigates through this rental crisis, it is imperative for all stakeholders – renters, owners, and policymakers – to work together to find sustainable solutions. Addressing the underlying issues of housing affordability, supply, and demand will be crucial in creating a more balanced and equitable rental market for all.