An article published online 12/04/2018 via www.domain.com.au that quotes our Director, Leah Calnan
More properties are needed to keep up with high demand for rentals in Melbourne, experts say, as rents rise and stock levels dwindle.
Median rental prices for houses rose by 1.2 per cent for the March quarter to $430 per week, while unit prices rose 2.5 per cent to $410, according to the Domain Group Rental Report released today.
Inner Melbourne, an area that spans the CBD, Moonee Ponds, Elwood and Thornbury, had the highest quarterly and annual growth for houses – with the median price increasing to $615 per week compared with $590 in March 2017.
For units, the north east (including Preston, Kinglake and Hurstbridge) saw the highest quarterly growth and the second highest annual growth with prices rising to $360 per week, while the Mornington Peninsula had the highest annual growth of 6.5 per cent to $330.
Melbourne’s rental market remained competitive due to a drop in stock on the market in the past year, Domain Group data scientist Nicola Powell said.
In the year to March, the number of rental listings for both houses and units declined across Melbourne – with only the houses in the north west increasing in number.
“There was a significant decline in the number of listings in the Mornington Peninsula year-on-year and also in the outer east – it’s really dropped,” Dr Powell said.
The number of units available in the outer east fell 18.5 per cent to 720, while houses dropped 15.3 per cent to 1882.
The Mornington Peninsula had the second largest decline for houses listed (14.2 per cent), while inner Melbourne, the inner east, north east and the west all declined by at least 7 per cent.
Real Estate Institute of Victoria vice president Leah Calnan said more stock was needed, particularly in inner Melbourne.
“I would love to see more three-bedroom apartments being built by developers,” Ms Calnan said. “That would also accommodate the families that want to live in inner-Melbourne.”
Ms Calnan, a property manager with 20 years experience, said the demand for rentals had held strong coming out of the traditionally high period of January and February, with most properties attracting multiple applications.
“People are taking leases for 12 months and then renewing them for another 12 months – so there’s less turnover,” she said. “I think there’s also been some delays with some buildings over the past six months, so I think we’ll see those stock levels come back up.”
While rents were up, rental yields were down by 5.9 per cent for the year for houses – though up slightly (0.5 per cent) for the March quarter to 3.14 per cent, the second-lowest of all capital cities, just above Sydney at 3.11 per cent.
It indicated house prices had been growing at a faster rate than rents, Dr Powell said.
“What’s interesting is we are now starting to see quarter on quarter growth in rental yields, so it suggests that rents are starting to rise over the quarter faster than house prices,” Dr Powell said.
Yields for units were stronger, with a quarterly increase of 3.2 per cent to 4.47 per cent.
Elsewhere, Hobart had the strongest growth for the quarter for houses (6.3 per cent to $420), while Canberra topped the list for units (4.7 percent to $450).
Darwin saw negative growth for both houses (down 3.6 per cent to $530 for the quarter) and units (down 1.2 per cent to $410).