For the first time, Melbourne is the second most affordable city to rent in

author-avatar By on April 15, 2021
For the first time, Melbourne is the second most affordable city to rent in

House and unit rents in Melbourne have plunged, making it the second most affordable capital city for renting in Australia, tied with Perth.

Unit rents in inner Melbourne are now at 2010 levels, tumbling by $110 a week according to Domain's rental report for the March 2021 quarter.

Compared with this time last year, unit rents have plunged by 12.8% while vacant rentals remain 182% higher than last year at 4.4% as the impacts of COVID continue to be felt.

"The bounce in estimated vacant rentals is directly related to reduction in demand as a result of international border closures that have curtailed overseas migration and foreign student numbers, as well as more tenants becoming homeowners and remote working resulting in an exodus of city residents to lifestyle locations," said Domain Senior Research Analyst, Dr Nicola Powell.

"A stark turnaround in net interstate migration slipping into negative territory for the first time since 2008 has also weakened demand."

For the first time on record, Melbourne is now the second most affordable capital city to rent a house in, and the third most affordable to rent a unit in.

"Tightening rental conditions in Adelaide and Perth could push rents higher than Melbourne in the coming months, which would make Melbourne the most affordable city to rent.” 


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner-occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you.


Capital city rent prices in March 2021 quarter

City Unit median rent House median rent
Sydney $470 $550
Melbourne $375 $430
Brisbane $400 $440
Adelaide $350 $425
Perth $365 $430
Hobart $420 $480
Canberra $500 $600
Darwin $430 $550
National $429 $471

Source: Domain Q1 2021 Rent Report 

House rents in most capital cities hit record highs

According to the report, house rents in all capital cities except Melbourne, Perth and Darwin hit record highs in the March 2021 quarter.

Brisbane rents are at record highs with houses up $15 a week over the March 2021 quarter. House rents in Brisbane are now at $440 a week - a 7.3% ($30) increase from one year ago.

"This is the steepest annual increase in house rents since 2008 following three strong consecutive quarters of rent gains," Dr Powell said.

"For the first time in five years, it is now more expensive to rent a house and unit in Brisbane than Melbourne.”

Dr Powell said renters will continue to struggle to find a place to live, as Brisbane's vacancy rate declines to 1.5%.

"Tenants will find less choice, with the pool of available rentals shrinking by one-third compared to last year, pushing Brisbane’s vacancy rate to a multi-year low."

Adelaide house rents also increased by $15 a week in the March quarter, while Hobart's house rents jumped by $20 over the quarter pushing house rents to a new record high.

Sydney's house rents remained at their $550 record high over the March quarter.

But it was Canberra that trumped every capital city to be the most expensive capital city to rent a house and unit in, costing $600 and $500 a week respectively.

“Tenants have been operating in a landlords’ market for some time, and landlords are likely to have become accustomed to the fierce competition to secure a lease," Dr Powell said.

See also: Cut-throat competition: Desperate renters giving up pets and offering months of rent in advance

Canberra's vacancy rate plunged to 0.7% in March - 14% lower than last year.

"This is during a time Australian expats return, temporary overseas employees extend stays and the city is better placed economically, buoyed by the public sector and industries reliant on government spending," Dr Powell said.

Rents surge in outer-city regional areas as more Aussies make a sea or tree change

The trend towards moving to regional parts of the country has seen rents skyrocket, frustrating locals.

The Northern Beaches, Sutherland, outer south west, outer west and Blue Mountains in NSW, the outer east, south east and Mornington Peninsula in Victoria, and the Gold Coast and Sunshine Coast in Queensland all recorded median rental asking price growth as demand for properties in outer regions continues.

See also: The rise of regional property in COVID

In Queensland, the Gold and Sunshine Coast rental markets continue to outperform Brisbane as the annual number of residents moving from other parts of the country into the Sunshine State hits the highest level since 2006.

"Queensland has always been a preferred destination for those moving interstate. However, the pandemic has made remote working a possibility and may have fast tracked decisions or made a temporary relocation an option," Dr Powell said.

House rent prices are rising at the steepest pace of annual growth in 15 years, with house rents on the Sunshine Coast surging by $80 above last year, while house rents on the Gold Coast are $50 higher.


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Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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