Homes Victoria has released its Rental Report for the September 2024 quarter. It provides insight into the private rental market in Victoria through key statistics.
The rental market experienced notable shifts in the last quarter, marked by rising rents in metropolitan areas, a decline in new lettings, and increased borrowing for property investment. Regional and metropolitan trends diverged, reflecting differing market demand and supply.
The highlights in the report for real estate professionals include key changes in rents, lettings activity, bond trends, and market affordability.
Metropolitan Melbourne saw rents increase, while regional Victoria remained unchanged. Quarterly, metropolitan Melbourne had no increase in weekly rents, while regional Victoria experienced a minor increase over the three months.
The number of bonds lodged for new lettings fell by 4.5 per cent across Victoria, with the most significant declines in Outer Eastern Melbourne, which dropped by 12.0 per cent, and Gippsland, which dropped by 13.3 per cent. This indicates that decreases in new lettings are not isolated to a region. Active bonds dropped 3.6 per cent over the year, down from 677,492 to 652,766, between September 2023 and September 2024.
Though longer five- and ten-year trends show increases in active bonds, with growth concentrated on Melbourne’s outer fringe, the decline in active bonds may reflect a reduced availability in rental stock. The average tenancy duration rose to roughly 24 months, indicating reduced mobility across the Victorian market, except for one-bedroom dwellings, which saw the highest turnover at 15.5 per cent.
Financial activity in the rental market also ramped up, with Victorian households borrowing $7.341 billion for property investment, a 6.6 per cent quarterly increase. However, only 10.4 per cent of new lettings met affordability criteria for low-income households, a slight decline compared to the previous quarter. This indicates a disconnect between increased investment and its effect on rental affordability metrics. These numbers imply that retail investors need more support to ensure they can sustainably service their rental properties.
While the Metropolitan Rent Index remained stable, the Regional Rent Index rose by 1.6 per cent, highlighting the continued growth in demand in regional areas. Continuing shifts in the rental market underline growing affordability and tenant mobility pressures, especially in metropolitan Melbourne, where stability in the rental ecosystem remains a concern.
