Rental prices have boomed across Melbourne over the last 2 years. The below graph shows overall Asking Rents are up 28% for Units. Melbourne Inner City has increased twice as much.
It wasn’t long ago that many predicted high vacancy rates for years to come. So many cafes, bars, and restaurants were brought to their knees during lockdowns. The vibrancy of our great city was put in question!!
So what has driven the big jump in rental prices?
Landlord were always going to pass on higher holding costs and taxes imposts when they could. But there are definitely more variables in play.
Overseas migration has been massive. The below graph shows that over 2,000 migrants settled in our city each week last year. Actual numbers were 67% higher than Government projections one year prior. Seriously.
With our population growing faster than ever, you would hope that new building supply is ramping up. It’s not.
The below graph shows how dire the situation is. Multi-Dwelling Planning activity has fallen off a cliff. Last year, just 16,025 new dwellings were approved across all Melbourne Council Areas.
The systemic Supply-Demand pressures that have led to a Rental Crisis will invariably impact the Sales market across the city.
More than 70% of the Permanent Migration Program is Skilled based. We’re talking Medicos, Engineers, Professionals… After renting, these new Melbournians will will have the desire and ability to purchase in coming years.
Expect a lot more news and debate about population growth and housing supply in coming months – for good reason.
