Melbourne rents for sale
Lots of rentals available, particularly in these ten suburbs. Source: Canva.
  • In a loosening rental market, ten Melbourne suburbs have high vacancy rates
  • Lower rental prices have also coincided with the rise in vacancy rates
  • Many of these suburbs had low vacancy rates in the past, but have risen to record highs

According to Domain’s latest quarterly report, house rents have hit record highs in every capital city except Melbourne, Perth and Darwin.

There has been a significant geographical shift of Australia’s population adjusting after COVID lockdowns. A key trend observed has been the preference for houses over units, for outer-city regions over cities and some capital cities over others.

Melbourne’s high rental vacancy rates indicate people are moving away from city rentals, with the median house price recently passing the $1 million mark for the first time according to data from the Real Estate Institute of Victoria (REIV).

The March quarterly report finds that if present trends continue, Melbourne could become the most affordable city in the country to rent a house this year.

Unlike Sydney – a city that has suffered housing affordability problems for quite some time even before the current housing boom – which recorded a remarkable ten suburbs with no rentals available (a vacancy rate of 0%), Melbourne vacancy rates are relatively high at the moment.

The ten Melbourne suburbs with most rentals

According to data from SQM Research, the following ten postcodes have the most rental properties on the market (with two of them recording double-digit vacancy rates):

Postcode Suburb Vacancy Rate 1yr ago 3yr ago Rent 1yr ago
3145 Malvern East 13.7% 6.4% 1.8% $556 $682
3003 West Melbourne 10.6% 9.8% 2.5% $516 $588
3125 Burwood 9.5% 3.7% 2.4% $498 $530
3168 Clayton 9.4% 4.8% 0.9% $450 $463
3053 Carlton 9.2% 4.2% 1.0% $613 $753
3000 Melbourne CBD 8.0% 9.3% 1.5% $401 $519
3335 Rockbank 7.5% 5.4% 3.9% $394 $406
3008 Docklands 7.5% 11.9% 2.1% $502 $962
3122 Hawthorn 7.4% 3.7% 1.2% $650 $771
3006 Southbank 7.30% 16.8% 3.0% $573 $600

Source: SQM Research

By comparison, these suburbs still had relatively high vacancy rates a year ago. However, 3 years ago vacancy rates were much lower.

High vacancy rates have coincided with lower rents for all ten suburbs as compared to a year ago. This makes sense from first principles. A high vacancy rate indicates relatively low demand for rentals as compared to supply. When the number of unoccupied (vacant rentals) is high, the harder it will be for landlords to find tenants and fill them.

Taking a look at some of the suburb trends, Malvern East has recorded the highest vacancy rate by far since 2005. The current 13.7% vacancy rate is much higher compared to the many peak rates that occurred near the end of each year, which only rose to around 7% on average.

Malvern East

[Select part of the chart to zoom in on various years, and ‘reset zoom’ button to return]

Meanwhile, areas like West Melbourne reached peak vacancy rates earlier in late 2020. SQM recorded an astounding 18.2% vacancy rate in October 2020, and although the vacancy rate is still quite high, it is showing signs of a declining trend since the start of this year.
West Melbourne

[Select part of the chart to zoom in on various years, and ‘reset zoom’ button to return]

The Melbourne CBD has unsurprisingly not fared well either these past few months, with many Melburnians moving out of the city and into regional areas. This is reflected in the sixth-highest vacancy rate in the city, compared to the record low tight vacancy rates recorded in the past 3 years (averaging around 1.5%).

Melbourne CBD

[Select part of the chart to zoom in on various years, and ‘reset zoom’ button to return]

There does look to be signs of a slow decline in Melbourne CBD’s vacancy rate, indicating a return to normalcy for hopeful business owners. But as investigated in a recent ABC News report, there is still a long way to go for recovery.

~~

Source: SQM Research

You May Also Like

Sydney rental prices on the move

After an eight-month decline, Sydney rent prices have been rising since November 2020

National rental vacancy rate finished 2020 lower: SQM Research

During 2020, Sydney and Melbourne rental prices fell, but rose everywhere else as vacancies fell.

Sydney rental yields showing signs of bottoming out?

Sydney rental yields have been stuck below 4% for many years

Darwin’s rentals the strongest in years: Domain

Darwin ended 2020 among Australia’s rental market heavyweights