Victorian rental crisis: Social housing call as rents top records

The depth of Victoria’s rental crisis has been exposed, as prices soar to record levels, vacancy rates tighten and cost of living pressures suffocate the state’s vulnerable.

Single mother Amanda Bingham is in subsidised rental accommodation with her daughter, and “hoping and praying” her lease will be extended. Picture: Tony Gough

The depth of Victoria’s rental crisis has been exposed, as prices soar to record levels, vacancy rates tighten and cost of living pressures suffocate the state’s vulnerable.

New data shows regional rents have reached a record median rate of $390 a week after a whopping $40 a week 12-month surge brought them close to Melbourne’s median of $410 for all property types.

And weekly rent for houses in the Victorian capital hit a record high $559 in June, topping the previous February 2020 peak just before the pandemic hit, SQM Research shows.

RELATED: How Victoria’s rental crisis has unfolded

How housing affordability could be fixed

How sensitive is your suburb to interest rate rises?

Units across the city have also reached pre-Covid levels, with vacancy rates in markets that struggled to find tenants through lockdowns — the CBD, Docklands and Southbank — drastically shrinking this year.

Melbourne’s vacancy rate was 1.9 per cent in April, SQM Research shows, having steeply come in from its 4.7 per cent blowout between two years of lockdowns in December 2020.

Vacancy rates are just 0.8 per cent in Gippsland, 0.9 per cent in Western Victoria, 0.6 per cent in Southwest Victoria, 0.8 per cent in Northern Victoria and 0.5 per cent in Northeast Victoria.

Prices have risen again and vacancy rates tightened for units in the inner city. This one-bedroom apartment at 1004N/889 Collins St, Docklands, is priced at $420 a week.

This one-bedroom apartment at 1703/433 Collins St, Melbourne, is listed for $700 a week.

Council to Homeless Persons chief executive Jenny Smith said Victorians were suffering through a “rental crisis” and “more than a third feel the pinch every time they pay rent”.

“We know people cut every other cost before they miss paying the rent,” she said.

“That means skipping meals, worn out school uniforms, shivering through winter with the heating off, and saying no to catch ups with friends.

“Sky-high rents mean people will stay in unsafe or violent homes, or turn to couch surfing and sleeping in cars, because they can’t find a rental for themselves and their family.”

Ms Smith said the crisis was being fuelled by a lack of affordable rentals and chronic under-investment in social housing, with Victoria needing 6000 new homes a year for the next decade to address that shortage.

Tenants Victoria chief executive Jennifer Beveridge said the high cost of buying a home was a significant factor, with more would-be homebuyers staying renters for longer.

“The lower the vacancy rate, the more people competing for rentals fuelling affordability and supply issues,” Ms Beveridge said.

Homes Victoria cites a 4 per cent annual increase in Melbourne’s Rent Index, including 2.6 per cent over the quarter, alongside regional Victoria’s 10.1 per cent annual jump, and 3 per cent over the quarter, in its latest March Quarter Rent Report.

In regional Victoria, the proportion of affordable rental lettings decreased to 26.5 per cent in the March quarter 2022, the lowest rate since the report series began in March 2000.

A two-bedroom house at 9 Walter Cres, Warrnambool, is on the rental market for $450 a week.

This three-bedroom house at 711 South St, Ballarat Central, is listed for $380 a week.

Ms Beveridge said renting permanently was a reality due to the high cost of buying a home and responses to housing affordability should not focus solely on homebuyers.

She said Commonwealth Rent Assistance — the subsidy for renters on Centrelink payments who don’t live in public housing — should be increased “as an immediate step”.

Ms Beveridge and Ms Smith noted the need for greater investment in social and affordable housing, welcoming commitments by the state and federal governments but stating more was needed, including extending the state’s Big Housing Build and lifting the 30,000 number of social and affordable homes the federal government committed to in its election pledge.

Both state and federal governments also have policies to help first-home buyers into the market, including stamp duty concessions and shared-equity schemes.

Horsham resident Lynne, 53, is living in short-term crisis accommodation provided through the Salvation Army after having no luck securing a rental over the past 16 months.

She has seen rental prices soar, in some cases more than 30 per cent, in that time, and struggles to even get a response from real estate agencies about inspections.

Rental prices in Horsham are similar to Melbourne. A two-bedroom unit at 3/63 McPherson St, Horsham, is listed at $420 a week.

In Cobram, this three-bedroom house at 1 Wilkurt St is listed for $380 a week.

“Housing needs to be built — but that isn’t going to happen next week,” Lynne said.

“Something has to happen; but the thing is, everybody’s feeling what’s happening with the cost of living, but when you’re on the bottom line of having a place to live in, no one wants to lose their profit margin and they pass it on to the next person,” she said.

“Well, I’ve got no one to pass it on to, I’ve just got to wear it, I’ve never been a high-income earner, never wanted to be rich, I just think I should have the right to be comfortable. Everybody needs to take a little step in, but no one wants to give up what they already have.”

PropTrack head of economic research Cameron Kusher said rental demand data showed a return to inner and middle Melbourne and an easing in regions and the Mornington Peninsula.

“You’re not going to have that influx (into the regions anymore),” he said.

“As capital cities get more and more back to normal I believe we will see some of those people that left go back to Melbourne … and rental price pressures that have been so prevalent in regional Victoria will start to ease over the next six to 12 months.”

It comes as a new cost of living survey by Savvy shows 1.42 million Australians devote 31-45 per cent of their income to rent, and 1.12 million, 40-60 per cent.

Young people are the most worried, with 50 per cent of 18-24 year olds stressed about rent or potential rent increases, 40 per cent of 25-34 year olds, and 33 per cent of 33-34 year olds.

Ms Bingham is concerned for young people that need to move out of home, as well as for her own situation if her lease is not extended. Picture: Tony Gough

CONCERNED FOR THE FUTURE

Single mum Amanda Bingham is “hoping and praying” her subsidised tenancy will be extended for fear of facing the “fierce” rental market.

Ms Bingham, 46, lives with her five-year-old daughter in an inner suburban house managed through ‘HomeGround’ — Victoria’s “first social enterprise real estate agency”.

She experienced homelessness while pregnant with her daughter, who she requested not be named, and spent four years in transitional accommodation in Richmond through Launch Housing before the organisation helped her move into her home in July last year.

The thought of having to step back out into Victoria’s rental crisis is “anxiety provoking”.

“My lease agreement was for 15 months and I’ve asked them to give me an update because I’ve experienced homelessness and I don’t know what’s going to happen in October when my current lease term ends,” Mr Bingham said.

“The thought of not being able to renew my lease and trying to find somewhere else to live is just completely and utterly devastating.

“There’s that risk of homelessness, plus I’ve got a five-year-old daughter who is in prep and has just started school this year.

“I haven’t actually jumped online to look at the rental market or anything because I’m just too scared — I’m just hoping and praying our lease will be extended.”

Ms Bingham noted the “kindness” of the owner of the property she lives in, which she believed had previously been rented out for more than what they would receive now.

She has found work with not for profit agencies and on boards at the Royal Women’s Hospital for her life experience, having escaped an abusive relationship and negotiated difficulties with another before falling into homelessness and being pregnant in a women’s refuge.

“I’m a very positive person and I’m a survivor. I’ve definitely had some difficult circumstances to overcome,” Ms Bingham said.

“When something’s thrown at you and you’re not in control it just makes it so much harder and I just don’t know what to do. Pray? I don’t know.

“Looking at the market and the cost of living and the (cash) rate rise that was just announced this week — it’s just really disheartening.”

Ms Bingham was forced to leave home at 16 and shared concerns for young people today who had to move out or wanted to.

VACANCY RATES

MELBOURNE (OVERALL)

1.9 per cent (April 2022)

4.7 per cent (December 2020) PEAK

3.2 per cent (December 2021)

2.7 per cent (January 2022)

REGIONAL VICTORIA AS AT APRIL

Gippsland: 0.8 per cent

Western Victoria: 0.9 per cent

Southwest Victoria 0.6 per cent

Northern Victoria 0.8 per cent

Northeast Victoria: 0.5 per cent

COVID’S WORST HIT RETURN

Melbourne (Central)

2.1 per cent (April 2022)

9.4 per cent (October 2020)

1.9 per cent (March 2022)

Melbourne (postcode 3000)

10.8 per cent (October 2020)

2.4 per cent (March 2022)

2.9 per cent (April 2022)

Docklands (postcode 3008)

18.8 per cent (October 2020)

1.8 per cent (March 2022)

2.4 per cent (April 2022)

Southbank (postcode 3006)

17.2 per cent (October 2020)

1.8 per cent (March 2022)

2.4 per cent (April 2022)

Source: SQM Research

RENTS

MELBOURNE , REGIONAL VICTORIA, VICTORIA

March 22: $410, $390, $410

December 21: $400, $380, $400

March 21: $400, $350, $395

Median Rent (per week), Rent Index, Quarterly Change*, Annual Change*

Metropolitan Melbourne: $410, 230.4, 2.6%, 4.0%

Regional Victoria: $390, 284.8, 3.0%, 10.1%

Victoria: $410, 234.8, 2.6%, 4.8%

* Percentage change figures are calculated from relevant Rent Index

** The Rent Indices are a better measure of changes in rents over time than the simple median price measure because the indices control for changes from quarter to quarter in the share of new lettings between both geographic areas and property types.

Source: Homes Victoria, March quarter Rent Report 2022

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: Victorian rental minimum standards: Market impact one year on and what’s to come

Scott and Alex Pendlebury list architect-designed Elwood home

Jordan Lewis: AFL champion sells Glen Iris family home