Rental crisis: Interest rate hikes see Melbourne median weekly rents soar by up to $112

Victoria is “among the most serious housing crises it has faced” as Melbourne weekly rents have soared by more than $110 in some areas since interest rates hikes began.

Alesha Capone

3 min read

March 15, 2023 - 6:01AM

Median weekly rents in several parts of Melbourne have risen by more than 10 per cent since interest rates began going up. Picture: NCA NewsWire/Jeremy Piper.

A growing number of Victorians are being smashed by the rental crisis, with median weekly rents in parts of Melbourne surging more than $110 since interest rates began rising last year.

The Reserve Bank of Australia has hiked the nation’s cash rate 10 times since May 2022, with the figure reaching 3.6 per cent – the highest in 11 years – earlier this month.

Community Housing Industry Association Victoria analysis of the SQM Research Weekly Rents Index found since rates started increasing, the $497 median weekly asking rent in Melbourne’s inner east has risen $111 (22.3 per cent).

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In the CBD, typical rents has grown by $112 per week to hit $627.

Weekly rent in several other Melbourne areas and Victoria’s northeast has also increased by 10 per cent, or more, since the rate rises kicked in.

A person sleeping rough in Melbourne’s CBD. Picture: Andrew Henshaw.

Large crowds inspecting rental homes has become common across the nation. Photo: Julian Andrews.

CHIA Victoria acting chief executive officer Jason Perdriau said a lack of affordable housing was “a primary driver for soaring rents in Victoria”.

“But the rise in interest rates isn’t helping right now,” Mr Perdriau said.

“Landlords can pass on their financial pain to tenants.”

This three-bedroom unit at 13 Juliana Ave, Wyndham Vale, costs $325 per week to rent.

The kitchen.

Recent PropTrack figures show Melbourne’s rental vacancy fell to 1.7 per cent in February, its lowest level since late 2018. Tenant advocacy groups are now expressing concern about an increase in illegal rental bidding.

CHIA Victoria has made a submission to the state government’s upcoming 2023-24 budget calling for a $6bn social housing investment to deliver 20,000 new homes across the next decade.

The submission noted the $5.3 billion Big Housing Build, announced in 2020 to deliver thousands of new social housing properties, was welcome but the program was due to expire in little over a year.

A room at this house in Dunne St, Kingsbury, can be rented for $275 per week.

Couch surfing is something that people with nowhere to live often have to do. Photo: Danielle Butters.

Infrastructure Victoria has recommended 60,000 new social housing properties be built across the state in the next decade.

Council to Homeless Persons chief executive Deborah Di Natale said Victoria’s rental crisis was “pushing more people into homelessness”.

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“Once you add the soaring cost of living and major shortfall of social housing we have all the ingredients that make this among the most serious housing crises Victoria has faced,” Ms Di Natale said.

Melbourne’s rental vacancy fell to 1.7 per cent in February, its lowest level since late 2018. Photo: NCA NewsWire/Andrew Henshaw.

2/40-42 Main Neerim Rd, Neerim South, is a two-bedroom unit available to rent for $325 per week.

The council has urged the state government to invest $47.5m to prevent the From Homelessness to a Home (H2H) program from being gutted.

The program provides rough sleepers and people experiencing chronic homelessness with stable housing and wraparound support services, but its funding is due to expire on June 30.

Tenants Victoria chief executive Jennifer Beveridge said the state government should consult with renters and landlords to legislate a “fairness formula” to regulate future private rent increases.

How much median rents have risen across Melbourne since the nation’s interest rates started increased last year. Picture: Supplied/CHIA Victoria.

A state government spokesperson said they were “investing record amounts to increase the supply of housing across the state” including 12,000 new social and affordable homes under the Big Housing Build.

“We are supporting Victorians through our Affordable Housing Rental Scheme, the $1.6bn Victorian Homebuyer Fund and tax incentives to support Build-to-Rent developments,” the spokesperson said.

In addition to the Big Housing Build, $300m will be invested to upgrade public housing over the next four years.