Covid-19 pandemic pushes down weekly rent in inner-city Melbourne, new report reveals

They might be some of the trendiest postcodes in the country – but savvy renters are cashing in after weekly rents plummeted.

Some of the most popular postcodes in Australia have experienced massive falls in weekly rents as a result of the Covid-19 pandemic, a new report has revealed.

According to a new CoreLogic report, “while rental rates are rising at the fastest pace since 2008, a gap has opened up between the rate of growth in house rents compared with unit rents, with unit precincts across the inner city areas of some capital cities recording a much weaker performance through the Covid period to-date”.

And it seems Melbourne has been impacted the most, with the 20 suburbs with the biggest drop in weekly rent all located in the Victorian capital.

One of the major factors in this surprising trend is the fact that Melbourne was heavily reliant on international students pre-pandemic, and so was hit harder once our borders were slammed shut.

And given Melbourne’s lengthy lockdowns, it makes sense that inner city dwellings were hardest hit, with people unwilling to shell out for high rent prices only to be trapped at home for months on end.

Rent in Melbourne have fallen dramatically. Picture: Daniel Pockett/NCA NewsWire

“The rise and subsequent fall in inner city unit rental listings was most evident in Melbourne,” CoreLogic’s Tim Lawless wrote.

“The larger surge in inner city unit listings across Melbourne is likely a factor of a more substantial demand shock attributable to stalled overseas migration, along with the recent unit construction boom being largely concentrated within inner city precincts such as the Melbourne CBD and surrounding suburbs.

“Prior to Covid, Melbourne was attracting the largest number of net overseas migrants, with a large portion of these students and visitors who gravitated towards inner city rentals.”

The report revealed that in Melbourne, the median weekly rent on an inner city unit in March 2020 was $504, which was $56 per week higher than the median unit rent across the broader Melbourne metro region.

But by October 2021, inner Melbourne weekly rents were -18.1 per cent, or $91 below their pre-Covid high, with the median weekly rent reduced to $413, which is now $6 a week cheaper than the broader Melbourne metro median rent on a unit.

In Sydney, renting an inner city unit is now -3.1 per cent cheaper than it was in March last year.

Melbourne’s rental market has been impacted by lengthy lockdowns. Picture: David Geraghty/NCA NewsWire

Based on a CoreLogic analysis of Australian Bureau of Statistics data, Australia’s biggest falls in rent since early 2020 have been in Melbourne units.

Inner Melbourne units were down 22.4 per cent, followed by Carlton down 18.4 per cent, Southbank down 18.3 per cent, Docklands down 16.5 per cent, North Melbourne down 13.8 per cent, Flemington down 12.7 per cent, Albert Park down 12.5 per cent, East Melbourne down 12.3 per cent, South Yarra west down 12.2 per cent and South Melbourne down 11.8 per cent.

The trend continued across the city, with South Yarra east down 9.7 per cent, Brunswick down 9.5 per cent, Brunswick East down 9.4 per cent, Parkville down 9.3 per cent, Port Melbourne industrial down 8.8 per cent, Caulfield down 8.6 per cent, Clayton down 8.5 per cent, St Kilda down 8.4 per cent, Collingwood down 8.2 per cent and Armadale down 8.1 per cent.

But Mr Lawless predicted the trend would be temporary, with change expected as Australia reopened post-Covid.

“Rental demand for inner-city tenancies is likely to increase further as the CBD’s and inner suburbs become more vibrant as restrictions ease and workers gradually return to work,” he said.

“Once international borders open more fully, it’s likely demand for inner-city unit accommodation will rise more substantially, especially as foreign students and international visitor numbers start to lift.”