A significant market movement was recorded over the last week as Real Estate Institute of Victoria (REIV) revealed that that Victoria’s rental vacancy rate had declined to its lowest level ever, 1.8%, since the group started gathering data sixteen years ago.
Aside from presenting an update on the rental market, this report also discussed the supply and demand condition of housing in the state. For reference, “a vacancy rate of at least 3% is required for a healthy rental market: where there is enough vacant housing supply to meet demand.”
Providing an explanation to the changes in the market, the key factors affecting rental vacancy rates were identified as population growth, lifestyle trends and property price growth.
“These record low figures coincide with the Victorian Government’s introduction of proposed changes to the Residential Tenancies Act which strip away landlords’ rights to control what happens with their investment property,” said REIV President Richard Simpson.
“The Bill, which is currently before the Parliament, is likely to result in increased competition for rental properties, greater screening of tenants and will place more pressure on rents if it is passed in its current form.”
Specific data for select areas in the state were also displayed. About a month ago, the vacancy rate for Inner Melbourne was steady at 1.8%. Middle Melbourne’s was 2.5% while Outer Melbourne’s was 1.6% contributing to a Metropolitan Melbourne median vacancy rate of 1.9%, the lowest in a decade. The rental vacancy rate for Metropolitan Melbourne, meanwhile, was lowest in June/July 2008 at 1.7%.
Similarly, Regional Victoria’s rental vacancy rates trended lower, having continuously declined over the last 15 years. At present, it has dipped to an all-time low of 1.5%.
On a brighter side of things, Simpson said the rental market is already highly competitive, with solid turnouts at open for inspections which will only increase as spring begins.
Another notable finding was that the increased cost of renting a home for the majority of the areas despite the drop in availability of rental stock.
“The median weekly rent for a house in Metropolitan Melbourne was $450 in July 2018, compared with $425 in July 2017. In Regional Victoria, the median increased from $310 to $330 per week,” Simpson noted.
He also said that a better situation for renters was not expected in the short to medium term, given Victoria’s fast-growing population and financial institutions’ lending restrictions to investors.
