As 2018 heats up, so does the Melbourne rental market. The first quarter of any new year is particularly enjoyable for the property management industry as the first quarter represents the busiest leasing period for the year. January through March is typically known for the time that people pack their bags, move interstate, upsize, downsize, relocate back from overseas, start University, start new jobs and generally shake up their living arrangements. Lifestyle changes play a crucial role within any rental market and the core demographics of the Metro Melbourne area demonstrate this at the start of every year.
Within Metro Melbourne the vacancy rate has remained at 2.2% (as per the REIV vacancy rates), which is strong indication the supply and demand within Melbourne is still remaining stable. Industry standards suggest that vacancy rates less than 3.0% show a healthy rental market, for both Tenants and Landlords. The vacancy rate within Metro Melbourne has remained at 2.2% since approximately July last year (2017) and median rents have had a slight increase to $440 per week in December 2017, from $430 per in November 2017. Rental yields are still ranging between 2.9% to 5.4% (as per the statistics from realestate.com.au) within Metro Melbourne areas for 1, 2 & 3 bedroom properties.
The Victorian Government continues to invest within transport infrastructure throughout Metro Melbourne, with projects such as the Melbourne Metropolitan Rail – delivering new underground, high capacity rail line servicing to Melbourne’s city centre, education, health and research precincts. The Domain interchange development located on St Kilda Road, Melbourne will certainly increase Tenancy popularity within the 3004 postcode and surrounds, as transport access and commutes will become streamlined for all local residents within the next few years to come. The Railway level crossing removals, with 50 of Melbourne’s level crossings being reduced/removed over the next 8 years will ultimately reduce travel times for road and rail users and these are occurring in a variety of suburbs throughout the greater Melbourne region. Furthermore the Stonnington Council has commenced its Cato Square $60+ million transformation of the old Cato Street car park in Prahran into almost 10,000m2 of multifunctional urban parkland – which is capped to be one of the largest, most ambitious and exciting construction projects ever delivered in the City of Stonnington. With such infrastructure development within the Melbourne region, demand for rental properties are deemed to increase amongst the areas of major redevelopment. Therefore, it is worth keeping an eye on the growth in the coming months/years.
It is recommended to remember that the Metro Melbourne rental market is a ‘market within markets’, which should not be defined by the broad brush statistics of the overall Melbourne rental market, as a whole. Metro areas have experienced higher demands amongst a wider group of demographics which assist the vacancy rate of 2.2% across the city. Metro areas have a greater appeal to the rental market and demonstrate a core demographic of professional couples, professional singles, professional share housemates, young families, downsizers and University students. The core demographic of the Metro Melbourne area typically aged between 21-39 years old and have a typical lease period of between 18-36 months per property.
With an abundance of activity within Metro Melbourne and its surrounds, it is certainly a rental market to keep an eye on within 2018.
Luke Spence- Head of Business Development & Leasing