Melbourne Rental Market Now Australia’s Second-Most Affordable
Over the course of Q1, 2021, average values within Australia’s rental market increased to record-level highs. The Melbourne rental market is lagging behind during this time and has now been proclaimed as the second-most affordable Australian capital city to rent in. This is good news for young people looking to enter the market as owners as it helps them to save for a deposit.
Post-lockdown recovery saw Australian house rental prices increase in value by 0.6% over the course of the first quarter, 2021. Hobart recorded the highest quarterly rise in weekly house rents at 4.3%, followed by Adelaide at 3.7%, Perth at 3.6% and Brisbane at 3.5%. Meanwhile, Sydney, Canberra and Darwin remained consistent. Melbourne saw a slight decline as its house rental prices dropped by 2.3%, making it the second-most affordable city to rent in for the first time on record. Its house rental prices were equal with Perth’s and were only slightly higher than Adelaide’s.
Similarly, Melbourne’s apartment rental prices fell by 2.6% in the quarter, back to the levels they reached in 2015, more than half a decade ago. Melbourne’s annual apartment rent decrease of 12.8% in the twelve months before the end of Q1, 2021 was the steepest decline since Domain records began in 2004.
This change is drastic considering Melbourne was the third-most expensive Australian city to rent in in mid-2020. Inner city vacancies too are through the roof: 182% higher than last year. This demonstrates the shift of living from city centres to suburban and regional areas due to the COVID-19 pandemic and highlights the potential for investors to receive greater returns in areas away from city centres. Inner city rents in particular have plummeted and sit now at 2010 levels; having been reduced by, on average, $110 per week. Analysts have suggested that Melbourne could soon become the most affordable capital city to rent in in Australia.
While Perth currently has the highest asking rents in six years, and Canberra holds the highest median weekly rent fee, Melbourne rents are becoming increasingly affordable. The average cost of renting a house in Melbourne at the moment is only $430, while a unit will cost $375 per week to rent.
The state of the Melbourne rental market is great news for those looking to enter the property market as owners. Cheaper rents offer a better chance to save money for young people looking to purchase a home, especially if they can negotiate a lower weekly fee due to high availability. However, for investors, the current decline in rental prices highlights greater potential for return on investment in suburban and regional markets at the moment.
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