Melbourne vacancy rates: Vacant rentals on rise in inner suburbs
Rental bargains are available in some of our most sought-after suburbs, as tenants empty out.
Apartments have emptied out in popular inner-city hot spots that were previously deemed bulletproof, causing Melbourne’s rent prices to plunge.
Richmond, South Yarra, Prahran and St Kilda have all had hundreds of renters vacate during the coronavirus crisis, with landlords unable to fill their properties again without dramatically reducing rents.
Almost 16,000 properties in Greater Melbourne emptied out in the six months to October, with the number of vacant dwellings rising from 11,091 in March to 27,070.
It’s caused the vacancy rate to jump from 1.9 per cent to 4.4 per cent in the same time.
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The latest SQM Research report also shows Docklands and Southbank vacancy rates continue to skyrocket to new heights of 18 per cent, when they started at below 5 per cent in March.
But vacant listings are also on the rise in popular inner-city haunts including Richmond, South Yarra, Prahran and St Kilda, where vacancy rates have spiked from about 2 per cent in March to between 6 and 8 per cent.
Propertyology director Simon Pressley said renters would find some “basement bargains” in the languishing CBD and the flow-on effect was being felt in neighbouring pockets.
“It was interesting to see Richmond’s empty apartment numbers soar from just 127 in March to 553 in October,” Mr Pressley said.
“I suspect what we’re going to see for some months is vacancy rate increases in different parts of Melbourne.”
The property expert said areas like Richmond and South Yarra were more severely affected because of the amount of apartment rental stock available.
But the worst could still be yet to come, with ABS statistics showing more than 10,000 people had left Melbourne and moved elsewhere in Australia in the first half of this year.
“How many more people who were in lockdown have decided they were going to leave once things opened up?” Mr Pressley said.
“I won’t be surprised if there are further increases in rental vacancies because of this.”
Collings Real Estate head of property management Caleb Pikoulas said apartments in Richmond and Collingwood were taking more than a month to lease, even after their weekly rate had been reduced by more than $100.
He said properties in Melbourne’s east and south like Hawthorn, Caulfield and St Kilda were taking longer than in northern suburbs like Northcote and Thornbury, where stock was a little more affordable.
“It took about five weeks to lease a one-bedroom unit in St Kilda, which is usually the sort of product that would fly out the door,” Mr Pikoulas said.
Student accommodation and sharehouses had taken the biggest hit during the pandemic, he added.
“There are so many apartments on the market, so there’s so much for renters to choose from,” Mr Pikoulas said.
“Renters are taking their time because they have so many options, and they may already be on a rent reduction so they’re not really looking at moving yet.
“I think it should improve (for tenant seekers) in January and when the rental moratorium ends … but I don’t think it’ll improve at all until next year.”
Property commentator Terry Ryder said the lifestyle exodus of Melburnians to regional Victoria was also impacting vacancy rates.
But he said most parts of Australia, including regional Victoria, were still seeing severe rental stock shortages.
“The national vacancy rate is 2.1 per cent but that number is deceptive as Sydney has a vacancy rate of 3.6 per cent and Melbourne 4.4 per cent, which is keeping the national average relatively high,” Mr Ryder said.
“The reality is that Australia is in the grips of a severe rental crisis and to ignore the social and economic impact of this would be a mistake.”
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Originally published as Melbourne vacancy rates: Vacant rentals on rise in inner suburbs