Melbourne unit rents fell for the first time in 15 years: Domain

Melbourne house and unit rents fell over the June quarter, with unit rents recording the first annual fall in 15 years, according to the Domain Quarterly Report for June.

With Inner Melbourne seeing house rents drop by $40 and units by $35 a week over the June quarter, alongside a rapid increase in the number of properties for lease, tenants are in a strong position to negotiate prices as their options expand.

June 2020 QoQ change for Melbourne rental prices

“Melbourne’s rental prices fell over the June quarter for both houses and units. While house rents remained stable over the year, unit rents recorded the first annual fall in 15 years. The drop in unit rents have pushed gross rental yields to a near-record low.”

“Inner Melbourne felt the brunt of price declines over the June quarter, median house asking rents dropped a staggering $40 and units $35 a week. Vacancies have surged in inner Melbourne, with advertised rentals lifting 64 per cent from March to June. This has created a discounting war, forcing one-third of inner Melbourne landlords to slash asking rents in an attempt to secure a tenant.

“Many short-term leases have converted to long-term, increasing rental choice. With significant job losses and wage cuts, tenants may have relinquished higher-priced rentals in favour of affordability or to move in with family. Though international border closures have weakened demand, Melbourne is particularly exposed to a drop in overseas migration, student population and tourism, as a significant proportion of rental demand comes from overseas. This is particularly evident in the CBD, which also has a greater exposure to the industries most vulnerable to the job losses associated with the coronavirus pandemic and has a high proportion of households renting.”

“Vacancies are likely to remain high in the coming months across metropolitan and tourist areas, which could result in further rent reductions. Any potential renewed short-term demand from interstate travel has been curtailed as Melbourne enters a second lockdown,” said Domain Senior Research Analyst, Dr Nicola Powell.