Renting a house in Melbourne is now cheaper than it is in Hobart, due to a runaway property market on the Apple Isle and an unusually strong unit rental market in Melbourne.
Domain senior research analyst Nicola Powell said Hobart’s strong rental price was extraordinary.
“Overall for the city it’s cheaper to rent a house in Melbourne than it is in Hobart and that’s never happened before,” Dr Powell said. “Rental competition in Hobart is extremely tight and affordability is being pushed further and further to its limits.”
Domain data show house rents in Melbourne were flat for the quarter at $440 per week; in Hobart the median rose from $420 to $450 in three months, a 7.1 per cent rise.
Median house rents
Victorian Council of Social Services chief executive Emma King said low wage growth meant the rent hikes would impact low-income earners the hardest.
“When people on low or fixed incomes have to pay more in rent, they must cut back on things like food, heating or medical care,” she said. “That’s terrible.”
The relative weakness in Melbourne house rents could be due to strong unit prices, Dr Powell said.
“In both the sale and rental markets, units are outperforming houses,” she said. “It’s almost a little bit counter-intuitive to what you’d expect given Melbourne has a lot of development and a big supply pipeline. But Melbourne has strong population growth.
“Maybe it illustrates a preference of renting a unit and being closer to the CBD than renting a house.”
Median unit rents
Melbourne Asset Management director Cameron Osbourne said an uptake in apartment living meant inner-city units were rented more quickly.
“It’s probably the fact that they’re still cheaper … and people are starting to value that location. Areas like Richmond and St Kilda, there just aren’t very many places around,” he said.
“Even in the last couple of days we’ve been doing rental increases for places that haven’t had them in the past couple of years.”
In well-connected and bustling suburbs like South Yarra and Windsor, the renting situation was tight, Hocking Stuart South Yarra head of property management Louise Perrignon said.
“We’re finding the situation for rentals really strong, the demand is really high,” she said. “We’re having seasonal peaks and troughs but we had our biggest month ever in January.”
Median weekly house rents
|Melbourne – Inner||$625||$610||$615||2.5%||1.6%|
|Melbourne – Inner East||$590||$590||$580||0.0%||1.7%|
|Melbourne – Inner South||$650||$650||$600||0.0%||8.3%|
|Melbourne – North East||$410||$400||$400||2.5%||2.5%|
|Melbourne – North West||$400||$400||$390||0.0%||2.6%|
|Melbourne – Outer East||$440||$430||$430||2.3%||2.3%|
|Melbourne – South East||$400||$400||$400||0.0%||0.0%|
|Melbourne – West||$390||$390||$380||0.0%||2.6%|
It was not so competitive that the balance had fully tipped in favour of landlords, however.
“Everything’s price sensitive. Prices are stable-ish,” Ms Perrignon said. “We’re not getting outrageous pricing, it keeps growing but it’s not rocketing away.”
ANZ head of Australian economics David Plank said he’d seen both data and had anecdotal evidence to suggest the Melbourne rental market was still difficult to navigate for tenants.
“The data does suggest Melbourne vacancy rates are falling and I’ve had a recent experience with a new member of my team trying to find somewhere to rent in Melbourne experiencing rental bidding at open homes,” he said. “That would suggest that there’s tightness and upward pressure on rents.”
Since December, the vacancy rate has been trending downward from 2.2 per cent to 1.4 per cent in March, Domain data shows.
Median weekly unit rents
|Melbourne – Inner||$475||$450||$450||5.6%||5.6%|
|Melbourne – Inner East||$425||$410||$410||3.7%||3.7%|
|Melbourne – Inner South||$425||$420||$410||1.2%||3.7%|
|Melbourne – North East||$370||$370||$360||0.0%||2.8%|
|Melbourne – North West||$360||$365||$355||-1.4%||1.4%|
|Melbourne – Outer East||$380||$370||$360||2.7%||5.6%|
|Melbourne – South East||$350||$345||$350||1.4%||0.0%|
|Melbourne – West||$340||$335||$330||1.5%||3.0%|
Mr Plank said strong population growth would be one of the core drivers in buoying the Melbourne rental market.
“I think Melbourne’s migration rate has been strong which has helped to absorb the stock,” he said.
This news was first published in www.domain.com. Here is the link to the original article: https://www.domain.com.au/news/melbourne-weekly-house-rents-now-cheaper-than-in-hobart-but-unit-rents-on-the-rise-817671/