‘I was so broke’: Melbourne rents reach record high

Melbourne rents have reached record highs as demand for rental properties outstrips supply, putting pressure on tenants and causing some to look for more affordable options or seek financial support.

The weekly median asking rent for a house in Melbourne has hit $580, up $30 from the same time last year, the latest Domain Rental Report for the September quarter has revealed.

Unit rents have also increased by $30 a week in the 12 months to September, to a median of $550.

Despite the annual gains, Melbourne house and unit rents held steady over the past three months, in a sign tenants are reaching their limit.

Domain head of research and economics Dr Nicola Powell said while Melbourne rents had consistently set records over the past year, the rate of price growth was not as rapid as in previous quarters.

“The consistent nature of record rents has been really a pillar of Australia’s rental market for a long period of time,” Powell said. “[But] it’s very clear that rent growth is slowing and slowing rapidly.”

Melbourne’s rental vacancy rate remains low, recording only a slight increase to 1.3 per cent in the past 12 months. Powell said this signalled a lack of affordable rental properties to meet market demand.

“That financial constraint of record rents and cost-of-living crisis compounding is actually impacting tenants and changing their decisions,” she said.

“It might mean they’re relocating to a cheaper suburb, or getting a housemate, or compromising on number of bedrooms, or whatever that compromise looks like for a tenant.”

In Melbourne’s outer east, north east and north west, house rents have risen by double digits over the past year.

Unit rents also jumped by between 10 per cent and 15.6 per cent in the outer east, south east, west and inner south.

Jessica Robinett, 41, fell behind on her rental payments and was forced to look for another property after being hit with a $200 rent hike across two years, while her landlord refused to carry out required maintenance work.

Despite multiple issues with the three-bedroom house, including constant mould, a broken pantry door and a leaking hole in the living room ceiling caused by a storm, Robinett’s landlord increased the rent by $100 a week as her first year’s lease was up.

A year later, the hole in the ceiling still hadn’t been fixed and Robinett received notice of yet another rent increase.

Jessica Robinett was forced to look for a new rental property after being hit with two $100 rent hikes.Credit: Penny Stephens

“It went from $600 a week when we first moved in, to $700 a week just over a year after we moved in, and then they increased it to over $800 a week,” she said.

“I was so broke, I was 2½ to three months behind on rent. I was just paying whatever I could.”

Robinett struggled to pay the rent increases on a single income and began looking for a more affordable property in St Kilda.

The small business owner and mother of two said moving away from the area wasn’t an option because it would have been too far from her sons’ schools and her workplace, forcing her to consider making compromises like moving her family in with a housemate.

It took more than six months and the support of Launch Housing through its private rental assistance program for Robinett to secure a suitable, but smaller, property.

“It was so hard to find a place that was affordable,” she said. “It’s been a bit of a hard one for my boys, because we’ve had to downsize, and they’re now back to sharing a bedroom.”

Launch Housing group manager, immediate support, Bianca Cirelli said she had seen an increase in requests for immediate private rental support, with the number of employed people needing help to stay in their rental property nearly doubling since 2020.

Cirelli said it was becoming more common for tenants to make compromises to keep a roof over their heads.

Robinett said it took more than six months to find a property she could afford on a single income.Credit: Penny Stephens

“Melbourne’s increasing rental prices are putting more pressure on tenants, and in a cost-of-living crisis, it’s putting more people at risk of homelessness,” she said.

“When people can’t sustain their tenancies and have to find more affordable rent, they often have to move to a new suburb away from work, family, schools and childcare. That’s something we have seen consistently over time.”

AMP deputy chief economist Diana Mousina offered hope and said Melbourne could expect slight declines in rental prices as the property market continued to soften and more tenants opted to leave the rental market to buy a home.

She added that new property taxes were creating a negative sentiment among investors, which in turn would add to downward pressure on rents.

“With home prices going backwards, Melbourne will get small declines in the pace of growth for the rental market.”

With Tawar Razaghi