Cost of living crisis: Melbourne rents rise at fastest pace on record, PropTrack reports

Melbourne’s rental market has been hit with a record rent rise that’s put tenants at “the coalface of Victoria’s cost of living crisis”.

Melbourne’s rental market has been hit with a record rent rise that’s made tenants “the coalface of Victoria’s cost of living crisis”.

It comes as advocacy groups warn growing numbers of people are being forced onto the streets, middle-aged people are returning to sharehouses and some renters are paying $320 a week more to keep a roof over their head.

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The PropTrack Market Insight Report released Thursday shows the cost of renting Melbourne’s typical dwelling, including houses and apartments, has risen

10 per cent since September 30 last year.

That includes tenants’ budgets being squeezed by up to $60 a week (10.2 per cent) for a larger family home, while a typical three- or four-bedroom house is now adding $30 a week to outgoings for renters.

A two-bedroom apartment at 1501/28 Bouverie Street, Carlton is now asking $550 a week in rent, an increase of $200 after it was listed for just $350 a week in August 2021.

The huge uptick follows years of Covid-19 lockdowns and rent moratoriums in Victoria that had kept costs more affordable.

PropTrack economic research executive manager Cameron Kusher said the firm’s figures, which stretch back to 2016, showed the city’s median unit price was still more affordable than it was before the pandemic and were among the nation’s most affordable.

“Rents are only up 7 per cent since March 2020, compared with 18 per cent across the other capitals combined in that same period of time,” Mr Kusher said.

It’s small comfort for tenants paying anywhere from $25-$40 more a week for a unit as the price of petrol, groceries and energy bills soar.

Source: PropTrack

Tenants Victoria community engagement director Farah Farouque said many tenants were now struggling to cope, with a pair of hospitality workers reporting their rent for their CBD apartment had almost doubled from $330 a week set at the start of the pandemic to $650.

“Suburbs such as Frankston which were once known for having a good supply of affordable rental housing are also proving very competitive to get into,” Ms Farouque added.

“And we’ve also seen more middle aged people are having to move into sharehouse situations.”

Tom Whitelaw, Jon Epifanidis and Jesper Robinson are mates living in Windsor, struggling to pay rent. Jon is a landlord himself and has had to up the rent for his property to afford his own. Picture: Josie Hayden

Council to Homeless Persons chief executive Jenny Smith said the number of Victorians accessing homelessness services due to affordability had skyrocketed from five years ago as renters became “the coalface of Victoria’s cost of living crisis”.

“Surging rents combined with a lack of affordable housing stock and cost-of-living increases across a wide range of essentials have fuelled the rental crisis,” Ms Smith said.

This 1 bedroom, 1 bathroom apartment at 3803/60 Kavanagh Street, Southbank is asking $500 per week. In October 2020 it was asking $360 per week.

This 2-bedroom apartment 1205/52 Park Street, South Melbourne is asking $545 a week for rent, after being listed in May 2021 for $420 a week.

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Ray White Victoria chief executive Stephen Dullens said the agency, which manages about 50,000 rentals across the state, had noted a significant increase in demand from Melbourne tenants in the past few months.

Mr Dullens said he had heard of families taking up to 10 inspections to find a home, even as they offered to pay three or four months rent in advance, or to add $10 or $20 a week to the advertised rental price to win over a landlord.

“Whether it is migrants coming back, or because properties are being pushed back to short stays, it just seems like demand for rentals is through the roof,” he said.

“Supply doesn’t seem to be keeping up with demand, and anecdotally – it is harder.”

Mr Dullens added that as pandemic disruptions moved into the rearview mirror the most impacted markets of the past 18 months, apartments around the CBD and Southbank, had seen notable increases in demand.

Regional hubs such as Ballarat, Geelong and the Mornington Peninsula, which had tenants swarming over them during the past 18 months, were continuing to see similar levels of attention from renters.

REA Group Director of Economic Research Cameron Kusher said that rising interest rates was a factor in keeping first-home buyers in the rental market for longer.

Mr Kusher warned things could soon get worse for tenants, with the Reserve Bank of Australia announcing a sixth straight interest rate rise on Tuesday, which would make it harder for tenants to become homebuyers — and which landlords were likely to look to pass on if they could.

“I think the rental market is going to tighten from here, supply is only going to get harder to come across, rents are only going to go one way and that’s up,” he said.

— Additional reporting by Alesha Capone and Nathan Mawby

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Originally published as Cost of living crisis: Melbourne rents rise at fastest pace on record, PropTrack reports