‘Their minds were blown’: Melbourne suburbs where rents rose most

Catherine Pitre and her husband moved to Melbourne from Canada in July, and started researching rentals well in advance. They inspected their Glen Iris home the afternoon they landed.

They wanted a good school zone for their two kids, close enough for husband, Martin Clark, to ride to his work as a pathology lab operations manager, and near friends. With the benefit of a relocation specialist, and Clark originally from Australia, they had good advice about what to expect in the Melbourne market, but there were some surprises.

“Where we’re from, rents are advertised per month,” the 45-year-old said. “So we had to kind of figure out, ‘Okay, what’s our budget?’”

And despite acknowledging they were lucky to be able to afford to move into a sought-after area, having an international perspective didn’t help rationalise the cost.

“Everyone back home… their minds were blown that it was so expensive,” she said.

The weekly median asking rent for both houses and units in Melbourne remained at a record $600 high in the September quarter, Domain’s Rent Report revealed on Thursday.

In Glen Iris, the median weekly asking rent for houses jumped 10.5 per cent over the year to the end of September, while the median for greater Melbourne rose just 3.4 per cent.

Most of the suburbs that had the biggest hikes in house rents were in prestigious areas with limited turnover. Rents in Middle Park, with a median of $1250, soared almost 40 per cent in the past year, with just 63 homes leased over that period.

Domain chief residential economist Dr Nicola Powell said double-digit growth in some areas suggested the overall medians for units and houses across Melbourne might be masking what was happening at the bottom and top ends of the rental market.

“[The Melbourne median] is certainly pointing towards an ‘affordability ceiling’ being reached,” she said, noting this meant landlords would find it harder to “push through” rent hikes onto already stretched tenants.

“[But] there is divergence happening at that suburb level… Prestige suburbs feature prominently in the areas that have seen the strongest increases, and these are areas that combine lifestyle appeal and clearly limited rental supply to push those rents higher.”

East Melbourne, Camberwell and Beaumaris were all in the top five for growth, each with weekly asking rents of at least $500 more than the Melbourne median, and price jumps of 15 to 20 per cent over the past year.

Quantify Strategic Insights head of data and insights, Angie Zigomanis, noted many of the areas that jumped were not typical renter hotspots.

He said these smaller markets could be more volatile, which might not indicate long-term increases.

“You might find that next quarter they drop by 20 per cent,” he said.

Pitre and Clark’s leasing agent, Marshall White Stonnington’s Kate Humphreys, said the prestigious “family home” rental market often attracted new arrivals to Melbourne moving for professional and executive roles, and existing owners who were between homes or in the process of renovating, so the relationship between landlords and tenants was not typical.

“Melbourne, and Stonnington especially, is very small: everyone knows everyone,” she said. “Sometimes we find renters have been previous owners before… and renters then end up purchasing through our agency as well.”

For units, Eltham had the most growth in its median weekly asking rent, shooting up 15 per cent over the past year to $575 per week. The green-wedge suburb’s median house rent climbed by almost the same amount (13.6 per cent).

Zigomanis thought there was a limited amount of stock in an area that traditionally offered a “leaf-green” lifestyle, albeit at a more affordable price, pushing rents up.

“It’s probably just a lack of affordable options for people who want them,” he said, noting the surge in unit rents suggests people who could no longer afford a house tenancy were “cutting their cloth” to stay in the area.

Areas with similarly low turnover – Safety Beach, Albert Park, Caulfield and even more affordable South Kingsville and Kingsbury – were all in the top 10 for increases in unit rents over the past year, with inner north apartment-hub Brunswick the notable exception – it grew 13.3 per cent in the past year with more than 1000 homes leased.

Dale Clough, chief executive at Anika Legal – which provides free legal advice and support to Victorian renters – said record-high rents were affecting renters.

“We’re seeing renters being forced to move because a rent increase has made their home unaffordable,” he said, with a marked increase in enquiries from tenants being evicted due to arrears, and a typical client paying more than half their income in rent.

“We’re seeing renters hitting the limit of what they’re able to pay.”