The Melbourne suburbs where rents are on the up and up

Tenants know it’s not always easy to save for a home while renting, with rents increasing by at least 10 per cent over the last year in more than a dozen Melbourne suburbs.  

And demand from a growing number of would-be buyers priced out of the property market is turning up the pressure on rental stock in what were cheaper areas in middle and outer suburbs. 

According to Domain Group, the biggest rent hikes for units have been in Sunshine and Sunshine North, where prices have jumped 25 per cent and 15.4 per cent respectively in the past year. 

Tenants in Essendon West are also feeling the heat, with house rentals jumping 26.3 per cent to $480 a week. 

Domain Group senior economist Andrew Wilson said gentrification in Sunshine and Sunshine North – where rents have rocketed by more than 36 per cent over the past five years – had transformed the area. 

Demand for rentals in inner and outer-eastern suburbs from those priced out of a strong buyers’ market also resulted in  rental averages increasing 11.5 per cent over the year in Templestowe and 13.6 per cent in Warranwood. 

“People want to live there – renting or buying – and with prices rising so strongly, there are significant barriers to buying,” Dr Wilson said.

And it’s not going to get any easier for first-home buyers. 

​Mark O’Brien, chief executive of the Tenants Union of Victoria , said that compared with 20 years ago, it was taking longer for first-home buyers to get into the property market, which has kept rental demand very high. 

“Rents have generally been increasing greater than CPI over that period of time as well, so this is creating a combination of factors that is making it harder for people to get out of the rental market,” he said.

“There is now pressure on middle-ring suburbs and outer suburbs [from] rent increases, where in the past they have been less affected.”

Large rent increases have also been recorded in Melbourne’s inner-western suburbs, such as Yarraville, where rents have risen by 12.9 per cent in the last year. 

Fleur Raggatt and her partner, have been paying $450 a week for a two-bedroom villa unit in Yarraville for the past two years, during which time the rent has been increased by $25 a week.

She said the rental market was competitive, and that the villa had been the fourth property she applied for in the Yarraville-Seddon area.

To stand out from the crowd, Ms Raggatt says she tried hard to make a good impression with the agent at the open for inspection. 

“I said, ‘I’m ready to move in whenever you want’, and I just paid the overlapping costs,” the marketing manager, 36, said. 

1.3/141 Stephen Street, Yarraville, is up for rent at $450 a week. Unit rents there have increased 12.9 per cent.

Rental prices have also increased in the bayside suburbs. 

Hodges Sandringham director Katie Pickering said many young families in Black Rock and Mordialloc have been priced out by cashed-up downsizers. 

But she said families were still happy to rent in the area to be close to good schools and amenities. Rentals up to $900 a week were “pretty competitive”, she said. 

Landlords who sold their properties to take advantage of the strong property market also left a lack of rental stock, Ms Pickering added. 

Across the city, the median rent for units increased by $5 a week over the June quarter to an all-time high of $370.

For houses, rents were steady over the June quarter at $390, but are up 2.6 per cent ($10) on last year.