Rental Crisis: Victorian tenants could face weekly rents surging up to 43 per cent

Tenants could be forced to fork out hundreds more dollars a week if rent forecasts from a new report come true. See what your area’s rent could rise to. SEARCH YOUR SUBURB

Sarah Petty

3 min read

February 10, 2024 - 5:30AM

News Corp Australia Network

This four-bedroom townhouse at 82B Tudor St, Bentleigh East is up for rent.

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Rents are forecast to skyrocket, stripping Victorian tenants of hundreds of dollars extra a week in some suburbs as property investors sell up and migrant numbers grow.

A new report from Suburbtrends warns weekly rents across the state could soar by as much as 43 per cent by the end of the year.

The firm’s founder Kent Lardner said he believed Dandenong North would be one of the worst hit, with a 24 per cent increase for the cost of renting a house.

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Keysborough could rise 24 per cent and St Albans 23 per cent, with all tenants renting houses in all three facing an at least $100 a week hike.

For more affordable units, potential rent increases are projected to be even more severe potentially adding $180 more a week in some of the most in-demand areas, led by Bentleigh East which is tipped to rise 43 per cent.

Flemington could go up 39 per cent and Balwyn 38 per cent.

*Interactives include suburbs with fewer than 500 rentals which can skew forecasts.

Suburbtrends used machine learning, an application of artificial intelligence, to forecast expected rental prices.

Predictions were then calculated for a 12 month growth average to reduce fluctuation. However, outliers still existed, so there was a maximum cap of 50 per cent increases on rents.

Founder and property pundit Kent Lardner said any region with a forecast 30 per cent increase in weekly rent was a suburb with “an immense amount of upward pressure on prices”.

He added that one of the main drivers of rent surges was tenants looking for more affordable options, particularly units.

Use our predicted rent increase for houses heat map below

“It’s not that they just have a lower price, units are currently a significantly lower percentage or proportion of your household income,” he said.

“It appears that there’s a crowding out effect happening that people are squeezed out of the house market; they then go to what they can afford, which is units.”

This four-bedroom home at 35 Elmswood Blvd, Keysborough is for rent for $850 a week.

Rents in Keysborough could go up 23 per cent.

Mr Lardner added that there was “chronic lack of supply of units” and many new arrivals into the country “zeroed in on a unit”, putting further pressure on supply.

“If we’re building $700,000-plus apartments and $900,000-plus houses, that does not translate to an affordable rental, especially when an investor would expect something like a 3.5 per cent yield,” he said.

It comes after PropTrack records revealed Melbourne’s rental vacancy rate hit a new low of 1.15 per cent in January.

Use our predicted rent increase for units heat map below

Char Weeks has been tenant for the past 10 years, living in a two-bedroom apartment in Kew for about six of them.

Between December 2018 and December 2022, her rent rose by $87 a month. But her latest increase, which comes into effect on 12 February, will bump her monthly rent up another $371 — about $85 a week.

This two-bedroom apartment at 418/1 Ascot Vale Rd, Flemington is for rent for $650 a week.

Unit rents in Flemington could rise by 39 per cent.

Ms Weeks said she hadn’t been on a long-term lease in years, preferring to go month-to-month as it had “all been pretty cosy”.

“I felt comfortable that you can easily find affordable properties to rent, and I think the game might have just changed,” she said.

The 68-year-old said that the state of the rental market was forcing tenants to think about buying a property for the security and stability, which was something she would consider.

She added that another rent hike would make her more seriously consider moving to northern New South Wales, something she’d thought about for a while.

Your Home Hunter principal Wendy Eva-Scott said the competition for rentals was driving prices up and believed 2024 would be another “crazy year” in the market.

“I can’t see any change at this point from last year; people are just continuing to struggle,” Ms Eva-Scott said.