How Geelong tenants are dealing with rising rent

Geelong renters search for smaller, cheaper options as new data reveals the rental affordability landscape for Victorians is better than in other states.

Rental affordability has declined in the past 18 months in Victoria.

Rental affordability for households earning a typical income has dropped faster than any other state, but Victoria remains the most affordable to secure a rental property, new research shows.

Close to half of Victoria’s rental homes were out of reach for households earning the typical $111,000 income, PropTrack’s inaugural Rental Affordability Index shows.

That’s a 20 percentage point decline from three years ago, when people earning an equivalent median wage could afford 75 per cent of advertised rentals.

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The decline is more pronounced for those on lower incomes, with about 480,000 Victorian households earning about $49,000 a year no longer able to afford a rental without giving up at least a quarter of their income.

The Rental Affordability Index measures the share of advertised rentals that households across different incomes could afford between July and December last year.

It found 56 per cent of rentals were within the reach of those on a typical income, without spending more than a quarter of their income.

PropTrack senior economist Angus Moore said big declines in rents at the start of the Covid-19 pandemic had made Victoria comparatively more affordable.

The state government banned rent increases during the pandemic and subsequently limited rent hikes to once every 12 months.

The three-bedroom house at 9B Northam St, Highton, is available to rent for $520 a week.

Mr Moore said tenants’ prospects of finding a home in their budget had been on a sharp downward trajectory from the end of 2021 — bringing the state closer to the worst affordability since 2008.

Median asking rents rose 4.8 per cent in regional Victoria across the year to December 2023.

Report co-author Paul Ryan said a typical rental in regional Victoria was now $100 a week more expensive than it was at the start of the pandemic.

PropTrack economist Angus Moore

Tenants Victoria director of community engagement Farah Farouque said renters on low and even middle incomes were doing it tough.

“Most renters must compete in the private rental market to find their home and even the so-called affordable suburbs in the edges of the city are far less accessible to singles and families,” Ms Farouque said.

She added that as vacancy rates remained low, the outlook for Victorian renters earning low to middle incomes this year continued to look stressful.

The three-bedroom townhouse at 24 Bowlers Ave, Geelong West, is available to rent for $660 a week.

The pace of rent increases had declined in Geelong compared to six or 12 months ago, but the vacancy rate was tighter, Jellis Craig Geelong head of property management Amy Fonay said.

“Landlords are being a little bit more conservative with the increases of rent,” she said.

“Some still are because of mortgage rate hikes, but overall it’s probably a bit more moderate than is used to be.”

The three-bedroom house at 4 Anderson St, East Geelong, is available to rent for $450 a week.

Demand for properties was strongest in the mid price range, around $450 to $500 a week, with fewer people applying for higher-priced homes, she said.

“We’re finding that people are downsizing and generally that’s because units tend to come up a little bit cheaper than your typical family home.

Jellis Craig Geelong head of property management Amy Fonay.

“People are putting families into two-bedroom, three-bedroom units that rather than looking for a three-bedroom, two-bathroom house because the cost of those family home is now over the $500 mark.”

Ms Fonay said some tenants were negotiating when notified of a rent increase.

“It’s good to have those open discussions and to go back to the landlord and say the tenants can offer this, was this is something that you would consider?’

The four-bedroom house at 37 Majestic Way, Lara, is available to rent for $560 a week.

“In some cases it won’t be, but in some cases we’ve managed to find a happy medium to keep the tenant in place.”

Ms Fonay said tenants were more informed than they had ever been and frequently searched other properties on realestate.com.au.

“They also having to think about the cost of living and whether it’s going to be easy for them to do to spend that little bit extra or for them just to move into something else.”

Originally published as How Geelong tenants are dealing with rising rent