Victorian rental crisis: Tenants warned of worse to come as vacancies slip below 8000 available homes

Victoria has plunged to a record-low rental vacancy rate, with estimates there were fewer than 8000 homes available for tenants in September. Find out what tenants can expect next.

Rentals are being tipped for a price hike after vacancy rates slid to a record low.

Victorian tenants were fighting over fewer than 8000 homes after the state’s rental vacancy rate plunged to a record low in September.

And the situation is expected to get worse with tenants advised to expect rent hikes, more share-house living and competition from desperate families willing to flout future laws to get a roof over their head.

PropTrack’s latest insights into Victoria’s rental market found the state’s vacancy rate in September fell to 1.14 per cent, the lowest they have recorded since they began tracking the number in 2018.

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Latest Census data analysed by Informed Decision found there were 624,671 Victorian homes rented privately in 2021.

Contrasted with PropTrack’s latest vacancy rate for the state, it indicates there could be just 7870 rental homes available.

And with 498,472 of the state’s rentals in Melbourne at the time, the city’s present-day 1.15 per cent vacancy rate could indicate just 5730 available for tenants in the capital.

Informed Decision demographer Glenn Capuano said while the Census figures didn’t include homes available for rent that were vacant when the data was collected, extrapolating the number of homes vacant today from those numbers would be “in the ballpark”.

A three-bedroom townhouse at 33A Home Road, Newport, is listed for $950 a week.

PropTrack economist Anne Flaherty said it was likely the number of homes available for rent since then had declined, with the firm’s figures showing landlords accounted for almost 30 per cent of homes listed for sale across Melbourne in June.

Meanwhile decreased household sizes following the pandemic and rising immigration have increased demand for rentals.

“We are pretty confident that this is the lowest level on record,” Ms Flaherty said.

“And I think things will get worse, over the short term we are staring down the barrel of potentially even lower vacancy rates ahead.”

The economist projected that with new housing construction declining across the past year, household sizes would likely have to increase and there would be more people living in share homes.

Ms Flaherty said there had been a 16.3 per cent increase in memberships to realestate.com.au sister site flatmates.com.au.

35 McGeown Circuit, Cranbourne, is available to rent at $520 a week.

“And I think rents are going to increase,” she said.

“Plus we will potentially see tenants offering more than what landlords are asking for. And until people can’t get away with doing it, I think tenants will be desperate enough to do anything to get a property.”

The Victorian Housing Statement released last month referenced plans to ban landlords and rental agents from accepting even unsolicited offers above the advertised weekly price, however this has not yet been turned into legislation — leaving a window for cashed-up and unscrupulous tenants to get ahead of those struggling to make ends meet.

Ms Flaherty also noted that with Melbourne rents rising faster than any other capital in the past year, it was likely some tenants today would give up on saving for a house and simply buy an apartment just to secure housing for themselves.

“So you might see more active buying for more affordable homes,” she said.

A one-bedroom apartment at 13/300 Young St, Fitzroy, is listed for rent at $550 a week.

While the falling rental vacancy rate was good news for landlords, Ms Flaherty added that it might also entice more build-to-rent providers to build tenant-only homes in Victoria and reduce the risk of future rental shortages.

Tenants Victoria community engagement director Farah Farouque said the figures reinforced the need for every level of government to keep housing as a top priority.

“It continues to be a really tough environment for renters on low to moderate incomes, we need to bring on supply of more affordable housing as soon possible,” Ms Farouque said.

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Originally published as Victorian rental crisis: Tenants warned of worse to come as vacancies slip below 8000 available homes