Melbourne tenants face average $23 a week rent rise by start of 2024, far more in some areas

Melbourne rents are predicted to surge an average $23 a week by the start of next year, but could explode as much as $163 in some areas. See what’s forecast for homes in your neighbourhood.

The three-bedroom home at 383 Coventry St, South Melbourne is up for rent for $795 a week, but forecasts hint tenants could be paying far more next year.

Melbourne tenants face an average $23 a week hike in their rent by the start of next year.

But numbers could be far worse in some areas, with the hardest hit suburbs likely to be Port Melbourne, South Melbourne and Southbank with predictions the area’s $880 a week median rent for a house will soar to $1045, up $165.

New data from AI modelling real estate research firm Suburbtrends shows that even some of the city’s more affordable areas could see house rents surge more than $50 a week, including in Burnside Heights west of Melbourne where the average rent is tipped to rise from $460 to $512.

RELATED: 108,000 apartments needed to house Victorians

PropTrack: Melbourne rentals plummet, spark big government call

Why falling inflation isn’t good news for renters

Firm founder Kent Lardner said with rent in Melbourne accounting for 27 per cent of household income on average in Victoria, lower than in many other states, it was likely the city’s tenants would be squeezed further.

Paying rent above 30 per cent of an individual’s income is considered rental stress.

According to Mr Lardner’s six month forecast, this metric was going to rise to 29 per cent.

He forecast an average $23.67 rise for houses and $24.47 uptick for units to hit at the city’s busiest time of year for new tenancies in early February.

The four-bedroom home at 23 Belleville Close, Burnside Heights, is currently up for rent for $480 a week, but similar homes might cost more by the new year.

Latest Residential Tenancy Bond Authority figures showing it is the busiest time of year for tenants with about 27,000 bonds lodged in that month in 2022.

“In theory, if we don’t get a significant increase in salaries in the next six months, then clearly we can see that people are going to be out of pocket by another 2 per cent as a result of that change alone,” Mr Lardner said.

“As we start to get above that 35 per cent, it really starts to have a knock on effect to making the rental market more volatile.”

Werribee, in Melbourne’s southwest, has the second lowest median rent price across the city of $360 a week. However, Suburbtrends predicts this will increase to $381.

Hockingstuart Werribee’s head of property management Carlie Hoffman said there weren’t enough rental properties available in the suburb compared to the demand from tenants needing homes.

“There seems to be a constant backlog of families wanting to lease homes and just not enough properties available,” Ms Hoffman said.

“We are currently receiving anywhere from five to 20 applications per property and there is a large demand and interest on most properties that we put up for lease.”

The three-bedroom home at 6 Fountain Court, Werribee, is up for rent for $350 a week.

Ms Hoffman added that it was a challenging time for the rental market with legislation changes, land tax and interest rate rises forcing some owners to sell their properties long before they had intended.

“It is causing a ripple effect with pressure on the rental market and families all round,” she said.

The only locations Suburbtrends estimates rent prices will fall are Warrandyte and Wonga Park, with the typical rent expected to slide from $670 a week to $664.

Tenants Victoria director of community engagement Farah Farouque said they remained very concerned about the outlook for Victorian renters.

“The challenge they face has two key dimensions – affordability and availability of homes,” Ms Farouque said.

“It’s renters on low incomes and, increasingly, middle incomes who are feeling pressure right now.

“We are looking forward to practical measures in the Victorian government’s upcoming housing statement including a cap on rent increases and regulation of short-stay accommodation.”

The three-bedroom home at 17 Brushy Park Rd, Wonga Park, is currently up for rent for $570 a week.

However, Mr Lardner said initiatives like rental price caps usually did the opposite of their intended effect.

“Playing around with all these rent control approaches could turn us into San Francisco,” he said.

“We need lots of social and lots of public housing and ma and pa (investors) and build to rent corporate.

“I firmly believe that the solution has to be a lot of public housing, social housing.”

Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.

MORE: How $10,000 FHOG is helping build 12,000-plus new homes a year

Rental crisis: Melbourne renters forced to compete for sharehouses to save on costs

Housing crisis: Rent freeze raises risk of 200,000-plus home sales

[e-mail]