By Philip Webb
Whilst Melbourne’s rental market has dramatically plummeted over the past year, some of Victoria’s popular regional areas are now experiencing vacancy rates of less than one per cent. This trend has led to a two-speed rental market – reports are stating Melbourne is now the cheapest city in Australia to rent, whilst regional Victoria only grows in popularity.
Since border closures in 2020, residential rental providers in Melbourne’s CBD and inner-city suburbs have been left with no choice but to lower rental prices to fill vacant apartments. As Australia’s education capital, the halt on international students coming into the city has had a massive impact on Melbourne’s rental market, particularly on those smaller, inner-city apartments.
So, what does this mean for property managers going forward? With renters moving out of the city in search of a tree-change, many residential rental providers are now considering selling. However, I believe that this mass migration to regional areas is a knee-jerk reaction to the pandemic. Eventually, those who have moved to these regional areas will be required to go back to work, even for just a few days a week. In time, they will become sick of the long commute and return to the city.
Additionally, I urge property managers to consider that property values have doubled in the past 10 years, and are likely to double again in the next 10 years. Thus, we are advising people not to panic. There are thousands of ex-pats who want to return to Australia, so in the next two years, the rental market will be hot again. The Victorian government is clearly anticipating this bounce back of the rental market, recently committing $5.3 billion to build more than 12,000 public housing homes over the next four years to safeguard affordability.
Thus, we recommend that residential rental providers hold on to properties during this short-term struggle – ultimately, they will reap the benefits in the long term!