- 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]
[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.
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Source: SQM Research
