Melbourne’s rental vacancy rate is falling faster than anywhere else in the country, hitting 1.19 per cent in August. The figure is the city’s second lowest vacancy rate on record, with the lowest – 1.13 per cent – coming in March this year.
PropTrack have also revealed a 0.74 percentage point fall in the number of Melbourne homes for lease compared to last year, the biggest drop nationally. Across Australia, Victoria’s capital was only the fourth-worst capital — but economists generally consider a 3 per cent vacancy rate to be tight.
There are some pockets of Melbourne where even less than one in 100 rental homes are available today, including the outer east, south east and northwest suburbs. Citywide there are now 50 per cent less homes available than there were before the pandemic.
Things are even worse in regional Victoria where the vacancy rate fell to just 1.07 per cent. PropTrack economist and report author Anne Flaherty said there were several reasons behind the low vacancy rates including population growth and rising immigration levels since Covid-19 restrictions were relaxed.
Rising building costs and materials shortages were slowing residential developments like apartment buildings, at the same time as many Victorian landlords were selling up due to increasing regulations and costs associated with investment properties. These include the state government’s plan to slash the tax-free threshold for land tax on secondary homes from $300,000 to $50,000 next year.
Worsening housing affordability was also driving many would-be first-home buyers to rent instead, she added. The Real Estate Institute of Australia’s June quarter Housing Affordability Report revealed housing affordability declined 13.6 per cent over a 20-year period.
