Melbourne's rental prices reach an all-time high at the beginning of 2023
- Posted By Ndl 1 Realty
In December, rental prices in Melbourne reached a new high, with tenants facing steep increases as landlords look to offset the impact of interest rate hikes.
The median weekly rent for all housing types in the city increased by 2.3% to $450 in the last quarter of the year, reflecting a change of 9.8% since the beginning of 2022.
According to PropTrack's January Market Insight report, the gap between median rents for units and houses in Melbourne is narrowing as rents for units continue to rise and demand for them increases due to rising living costs and an increase in migration.
According to Cameron Kusher, Director of Economic Research at PropTrack, rental prices in Melbourne are expected to continue rising in the coming year. He stated that supply is low and demand is high. Properties are being leased quickly, and migration is increasing rapidly, with many people choosing to move to Sydney and Melbourne. This, he said, will further increase competition for rental properties.
Mr. Kusher stated that during the pandemic, units in Melbourne were not in high demand, but as people return to inner-city suburbs, popularity for units is now rapidly increasing.
Data from PropTrack shows that the median price for units in Melbourne rose by 1.2% in the last quarter of the year and 9% over the course of 2022, reaching $425. On the other hand, median house rents remained stable in December, but experienced a 4.5% overall increase throughout 2022, reaching $460.
According to Nerida Conisbee, Chief Economist at Ray White, the housing construction crisis will exacerbate the limited supply of properties, causing an increase in rental prices over the next two years.
Furthermore, she said that the rising cost of living may decrease the rate of household formation as people are less likely to move out of their current homes or shared living spaces, a trend seen frequently during the pandemic.
Mr. Kusher believes regional Victoria rental prices may decrease as more people return to Melbourne and others opt to purchase a property.
Meanwhile, Tenants Victoria is advocating for the state government to conduct a public consultation to establish a "fairness formula" to regulate rent increases.