Melbourne rental prices: Rents jump as inner-city living demand grows

Landlords have upped weekly rents for Melbourne’s most affordable homes in the past year, with only Sydney’s home costs rising faster.

Landlords have upped weekly rents for Melbourne’s most affordable homes by $75 in the past year, with only Sydney’s home costs rising faster.

With more people opting to live in inner-city flats and apartments, upward pressure has dragged the median advertised lease for units up 17.9 per cent to $495 a week.

New PropTrack figures released Thursday showed the growth, which includes a $20 (4.2 per cent) increase over the past three months alone.

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With the cost of leasing a house unchanged at $500 in the same period there is now just $5 difference between them.

Despite the recent pause in rising costs, families looking for a new house to rent are still $40 a week (8.7 per cent) worse off than a year ago.

5 Grassland Ave, Coburg is up for rent for $525 per week.

Inside the 5 Grassland Ave rental property.

PropTrack economic research director Cameron Kusher said there were a few major drivers of rising rents, including tenants preferring units now as a cheaper alternative and wanting to be closer to the city.

“The other big factor is migration has been really strong, particularly overseas migration,” Mr Kusher said.

“Most people that come into the country from overseas don’t have their own home in which to live so that creates more competition for rental stock.”

He added that as more tenants chose to live in inner Melbourne units, this had dragged the median weekly rent closer to that of houses.

Despite the nearly 5 per cent rise in rental prices for units in the past quarter, Mr Kusher said there was a silver lining.

“Yes, rents increased by 4.2 per cent, but that was down from 5.6 per cent the previous quarter,” he said.

“But I think certainly affordability is becoming a bigger issue.”

Cameron Kusher from REA Group says rental affordability is a bigger issue Melburnian tenants should be concerned about.

Rental Search Australia co-founder and director Jade Costello said Melburnians were now more willing to forgo an outdoor space or backyard than during the pandemic.

“People are just looking for more places that are affordable and that’s taking precedence over everything else,” Ms Costello said.

“Apartments and units are the entry level type of rental properties, so that probably makes sense why there’s been a jump of people leasing those.”

But for some lower income earners across Melbourne, another hike in median rent prices was concerning.

A two-bedroom flat at 11/10 Denbigh Road, Armadale is up for lease for $470pw.

Tenants Victoria’s director of community engagement Farah Farouque said renters on low to middle incomes were continuing to face difficulties.

“Competition is tough to secure an affordable home,” Ms Farouque said.

“Premier Allan has said that housing is a top priority for her government and that’s something that renters will take notice of.

“More and more Victorians are renting their homes, and for longer.”

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Originally published as Melbourne rental prices: Rents jump as inner-city living demand grows