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- Tenants say they live in fear of their next rent hike.
- Experts say rising rents are worsening the cost of living crisis.
- Rents have risen fastest in inner-city suburbs.
Inner-city Melbourne renters have been slugged with the biggest rent increases in the city, with asking rents climbing as much as 45 per cent in some suburbs.
Experts say rents are rising at an alarming rate, while inner-city tenants say the prospect of paying more money to their landlords than they can afford keeps them up at night.
Units had the biggest spike by far – rents soared by 45 per cent in Melbourne’s CBD over the past 12 months to a median $580 a week, 33.8 per cent in West Melbourne and 31.4 per cent in Carlton, Domain data shows.
Asking rents for houses grew strongly, too. They were up most in Hughesdale at 23.5 per cent to a median $618, followed by Werribee South at 23.1 per cent and St Kilda West at 21.9 per cent.
Rents increased by at least 10 per cent in more than half of unit markets across Melbourne, and in more than a third of house markets.
Domain head of research and insights Dr Nicola Powell said there was a clear trend towards rents increasing in inner Melbourne.
“When you drill down to that suburb level, all those areas with the strongest rental growth are in inner urban areas and inner-city locations,” she said. “What’s really interesting is that the trend is very strong in Melbourne.
“The areas that have seen the greatest increase in rents are those inner-city areas that are dominated by units.”
Powell said rents were rising faster in the inner city because of a reversal of the pandemic trend of tenants fleeing the CBD and the swift return of international students.
Despite some small relief in the vacancy rate – which rose from 0.8 per cent to 1 per cent – Powell said renters would still find navigating the market difficult.
“What we’ve got now though is vacancy rates have increased marginally,” she said. “But despite the vacancy rate nudging a bit higher, it showcases it’s still very much a landlord’s market, and it’s still challenging to tenants.
“Affordability will be very stretched and anyone new to the market will find it challenging to find a lease.”
Emma and Declan Allen were renting in Brunswick East, where unit rents have gone up 15.4 per cent over the past year.
They pay $500 a week for a two-bedroom unit, but have watched with unease as asking rents jump for properties advertised in their neighbourhood.
Other two-bedroom apartments in the same building have been advertised for $600, while a similar property in another building nearby asked $620.
Emma and Declan Allen say high rents are keeping them from buying their own home and starting a family. Credit: Jason South
“I fully anticipate this will go up $100 when our lease is up and that’s a concern for us,” said 32-year-old Emma, who works for the state government.
She said she would welcome some form of rent cap, given high rents were making it difficult to save for a deposit on their own place.
“I want to start a family and that’s a real concern for us – how are we going to be able to afford to have a child and rent?” she said.
“Maybe I was naive to think this would always be an option for me to buy, and now it feels more and more out of reach as every day goes by.”
Emma said the prospect of her next rent increase was keeping her up at night. Credit: Jason South
The tight rental market has come while the couple’s cost of living is on the rise, more broadly.
“I’m stressed all the time, and it keeps me up at night,” she said.
Everybody’s Home spokesperson Maiy Azize said spiking rents were happening at an inopportune time.
“What we’re seeing is a situation where Melbourne used to be considered one of the most affordable cities to rent, and we’re seeing that go backwards, unfortunately,” she said. “We’re seeing a lot of pressure on people for all sorts of reasons, including the interest rate increases and cost of living.
“This is the worst time for rents to be going up.”
Azize said the crisis could be abated with rent caps and a “serious” effort to increase social, affordable or public housing.
“This isn’t how we treat any other essential service in Australia,” she said. “There is a whole process utilities companies can go through before they raise costs in this way, and they can’t just kick people out of a service the way landlords can.”
Grattan Institute senior associate Joey Moloney said he preferred increasing government support to low-income renters as a way to alleviate cost pressures.
“In the short term there’s not heaps you can do. If, fundamentally, the problem is too many people fighting on too few houses, you can either take away the people or add more houses,” he said. “There are huge costs to pull back migration, and you can’t add houses overnight.
“What you can do is increase support to renters. It’s quick, it’s direct, and it helps ameliorate the cashflow challenge a poor renter is facing in a tight housing market.”
Moloney said a long-term solution would be to make the planning system more responsive to housing demand.
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