Melbourne Rental Prices Take Off As Buyers Wait For Price Drops
Tenants hoping for rental reductions in Melbourne’s highly sought-after housing segment have been sorely disappointed as asking prices continue to climb, which contrasts the recent downturn in the value of property prices.
According to the recent Domain Rental Report, the Melbourne market over the December 2018 quarter showed an average:
- 3 per cent rise in weekly rent
- Rents for houses growing to a new high of $440 per week
- Asking prices for units decreasing slightly to $410 per week
Improved Gross Rental Yields
Domain’s Senior Research Analyst, Nicola Powell, stated that improving gross rental yields suggest that rental prices are holding firmer than property values, though the improvement could prove to not be enough to coax investor interest due to short-term capital gains being nominal. Property prices are expected to continue falling across Melbourne in 2019 with Moody’s Analytics forecasting a 6 per cent decrease. Over the coming months, the federal election, the fallout of the Royal Commission and broader economic uncertainty will continue to impact property prices.
Of all Melbourne regions, the Inner South has displayed the most considerable jump in rental prices with the asking price for houses achieving on average between $600 and $650 weekly. For units, asking prices increased on average an extra $20 per week to $420 per week. In other pockets of Melbourne, no decreases in rental prices were recorded in the latest Domain Rental Report. However, the asking price for rentals in the South East, North East and outer East did show signs that prices had levelled-off in the most recent quarter, providing a short-term reprieve to tenants.
With a view to the long-term, it doesn’t appear as yet that the overall trend for rising rents will be abating any time soon, as strong long-term demand for housing continues to be underpinned by a growing population. This exponential and historic population growth, however, could show signs of dwindling in the long-term, advises Powell, as numbers of those moving from interstate and overseas begin to diminish.
Those Looking to Find a New Home Up Against Tough Competition
Those on the lookout for new rentals at the commencement of a study or work year will find it a stressful task as ‘peak season’ consistently generates surges of prospective tenants attending open for inspections. Highlighting the inflated demand for new rentals, MRE has again gathered high volumes of pre-registered prospective tenants to inspections—record rents continue to be achieved.
Attached to the large number of potential tenants showing up for inspections in 2019’s peak season are some of the lowest vacancy rates in Melbourne and MRE’s history. Through our superior marketing ad types and dedicated ‘30 Day Leasing Plan’, we maximise returns for landlords whilst ensuring minimum to no vacancy periods. These results are exceptionally high within the rental market’s peak season.
Fortunately for Property Managers and investors, the urgency for new rentals drives up prices, but households on lower incomes will not find the same benefits. Rising weekly rental prices as well as stagnating wages will create pressure for low income families in the current market.