Inner-city apartment rents plummet, regional house rents soar, in two-speed rental market
Rental prices for apartments in Melbourne’s inner suburbs have plummeted by up to 29 per cent in the year to March, while houses in some of Victoria’s most popular seachange towns have risen by as much as 35 per cent, the latest Domain Rent Report shows.
The figures highlight the two-speed rental market that has emerged across the state since international borders closed just over a year ago to contain the spread of COVID-19, driving the steepest annual fall in Melbourne’s median unit rental asking price on record.
Communications manager Sarah Johnson is one of many Melburnians who have taken advantage of falling rents in the inner city over the past 12 months.
In September last year, during the final weeks of Melbourne’s second lockdown, Ms Johnson moved out of her North Melbourne share house and into a spacious two-bedroom apartment in West Melbourne with her partner.
“We found this apartment in West Melbourne, which had a second bedroom or study for us to work from, and we asked for a discount on the advertised rent, which had already been reduced,” she said.
“It had been sitting empty for some time and when it was originally advertised, they were asking an extra $500 a month.
“Without those reductions, we would never have considered renting a place like this,” she said. “It gives us the space we need but allows us to still save for a place of our own.”
The median apartment rental price in West Melbourne fell by 21 per cent over the past year, one of six Melbourne suburbs to see unit rents drop by more than 20 per cent.
The CBD experienced the biggest fall in apartment rent prices, with the median rent dropping by 29.1 per cent to $390 a week. Unit rents in Docklands. Southbank and Carlton also fell sharply – by 27.6 per cent, 24.1 per cent and 23.9 per cent, respectively.
“Many of these inner suburbs, like Docklands, already had a higher level of development that was weighing on rental prices, so when you then have the additional factors brought about by the pandemic then that only exacerbates those downward pressures on rents,” said Domain senior research analyst Nicola Powell, adding that many of these areas were attractive to large numbers of migrants, particularly international students.
While vacancy rates in Melbourne’s CBD fell marginally in recent months, from 11.6 per cent in February to 11.4 per cent in March, Dr Powell said she expected the rental market in the city’s inner suburbs to remain weak while international borders remained closed.
“Until the international borders reopen and foreign students return we are likely to see a weaker rental market in those areas but I think it will get to a point where those rents will start to stabilise,” she said.
Meanwhile, along the Mornington Peninsula, rental prices for houses soared by up to 35.7 per cent in Portsea, to reach a median asking price of $950 a week. They increased by 23.6 per cent in nearby Sorrento and by 14.4 per cent in Barwon Heads, on the Bellarine Peninsula.
Median rents for units in many regional locations also skyrocketed in the 12 months to March. In Portland, unit rent prices increased by 15.2 per cent and in the Geelong suburb of Corio and central Bendigo, median unit rents increased by 12.5 per cent and 12 per cent, respectively.
Dr Powell said she wasn’t surprised that rents had jumped so steeply in some of the state’s most popular seachange towns, as well as some of Victoria’s more affordable regional areas.
“When you look at places like the Mornington Peninsula, which has always been popular among holidaymakers and people wanting that second home, it’s not surprising that demand has increased since the pandemic with more people seeking a lifestyle location and with people being able to live further away from their place of work than before,” she said.
“There’s no question that lifestyle locations have been the big winners out of this past year.”
Ref: RACHEL WELLS (on 17 Apr 2021). Inner-city apartment rents plummet, regional house rents soar, in two-speed rental market. Retrieved from https://www.domain.com.au/news/inner-city-apartment-rents-plummet-regional-house-rents-soar-in-two-speed-rental-market-1044921/.
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