The Melbourne suburbs where rents are getting cheaper

Tenants looking for relief from rising rents have few suburbs to turn to across Melbourne, where just four markets recorded falls in asking rents over the past 12 months.

The vast majority of Melbourne suburbs recorded rent rises over the same period, and just five marked no change, Domain data show.

The data comes as median asking rents for both houses and units citywide were stagnant over the September quarter. Experts said this indicated the rental market was slowing, though asking rents were still unaffordable.

However, many suburbs have recorded double-digit increases over the past year, several of which were in far-flung, cheaper areas, a sign that cash-strapped renters were moving further out of the city searching for affordable homes.

The biggest fall in asking rents was in the Ivanhoe East unit market, where median rents fell 12.1 per cent to $510 per week. That was followed by asking rents for houses in Caulfield and Parkville, which decreased 9.3 per cent to $830 and 8.5 per cent to $730, respectively.

The last market where rents fell was Sorrento on the Mornington Peninsula. House asking rents there fell 7.8 per cent to $713 per week.

SQM Research founder Louis Christopher said the suburbs where rents were falling were a disparate group.

“It could be a strong supply surge, so for example, the area had a new development open up, that could potentially cause it,” he said. “On the demand side, it could be a whole range of things. The localities could be near universities, and we’ve had a drop of international student arrivals which could explain it.

“I think the rental market is priced perfectly in some respects, so any [small] change in demand could see a fall in advertised rents.”

Belle Property director Alex Puglia said the fall in international student arrivals had affected Parkville’s market. However, he said, Parkville was more of a bridesmaid suburb for students looking to be near universities because it was not as well-connected to public transport as neighbouring Carlton and North Melbourne.

Parkville’s rental market has taken a hit over the past 12 months. Credit: Justin McManus

“Students consider Carlton and even North Melbourne, then go to Parkville as a third choice,” Puglia said. “It’s for price reasons as well. For what you pay in Parkville, it’s a bit better in those other suburbs.”

Rents were still rising in Carlton and North Melbourne, Domain data show. Puglia said other factors could also be contributing to the decline in rents in Parkville’s decline.

“There’s a surplus amount of stock within Parkville. The old Commonwealth Games village, all of that near Cade Way and then there’s the children’s prison there nearby. There’s always a high turnover of that one- and two-bed stock which I assume is keeping prices low,” he said.

Rents were flat for houses in Cape Woolamai, Eltham North, Middle Park, South Melbourne and Upwey.

Renters and Housing Union secretary Harry Millward said falling rents in a few suburbs were of little benefit to renters as a whole.

“To take advantage of falling rents one needs to be willing to move. To take advantage of this, you have to go through a really stressful life change,” he said.

“Whether or not the price is lower, we’re still at the whims of the market so renters are forced into a significant power imbalance. When rents rise around you, [tenants] have to fight to not have the rent pushed up ... whereas when rent falls there’s no mechanism to call up [Consumer Affairs Victoria] and say I should pay less rent.”

Millward said despite signs that asking rent growth was slowing, the market remained unaffordable for tenants.

“People are clearly paying unaffordable rents ... if we’re taking it out to a five-year timeframe, what is our rise in wages versus the rises in rents?

“There’s a significant discrepancy between the two, which is pushing people further towards or to poverty. This will continue as long as people are forced into market mechanisms for housing security.”

Christopher said it was unlikely the market would favour tenants for some time.

“Overall it’s still a landlord’s market in Melbourne. Melbourne’s population is still expanding fairly significantly, rising at just under 2 per cent per annum,” he said. “So demand for rental accommodation is still rising in Melbourne by 50,000 to 60,000 dwellings per year. And there’s no way we’re building those properties in that time.”