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Melbourne’s rental market recovery

Q & A with Rebecca Berry, Head of Property Management, Belle Property St Kilda & Brighton


Melbourne’s rental market has seen a dramatic turnaround over the last 18 months to two years.

Melbourne’s vacancy rates soared during the pandemic, peaking at more than 5.2 per cent in December 2020.

That had a major impact on many property investors’ rental yields – due to vacant properties or having to reduce rents.

But the turnaround has seen vacancy rates tighten to 1.8% in March, 1.7% in April and 1.6% in May.

That in turn has pushed median weekly rental prices up across all Melbourne regions. In the March quarter, unit rents jumped by $15 per week and the cost of renting a house hit a record high of $450 per week.

While broader industry data is instructive, it’s also important to gain real world insight into the daily cut and thrust of the market on the ground.

Rebecca Berry is Head of Property Management, Belle Property St Kilda and Brighton and can provide valuable insight about what the resurgent market means for rental providers and investors.


It’s been quite a turnaround since the dark days of the pandemic? What was the rental market like at its lowest point, and how has the market changed since? 

Yes, there have been some fairly dramatic and positive changes. Our business and team is feeling a lot happier with the way that things are going. And our clients are seeing some really good results now. 

We saw our rents reduced over the COVID period by about seven per cent. They have now climbed back to where they were prior to COVID, and are starting to increase over that, which is absolutely fantastic.


Is that a trend across the board?

The one to two bedroom apartments have really picked up. Some of those rents had reduced by about 10 per cent. Those are back to normal now.

But we are seeing the most significant rental price increases for houses. We’ve seen rents increase by $50 to $70 more a week for houses, than this time last year.


What were some of the biggest challenges during the pandemic and lockdown periods?

Rent arrears was a really tricky one. We had a lot of our renters in crisis, and they weren’t able to actually pay. So we had to come up with rental reduction plans to keep them in the home, which was obviously important for the renter, but also good for the owner.

We were able to keep all of our renters living in their properties. A lot of our property owner clients were excellent in regards to this.


St.Kilda has a large overseas contingent, did Australia’s closed borders exacerbate the rental market issues there?

Absolutely, I think it was our area and central Melbourne, that got hit the hardest.

At the peak, we had a vacancy rate of 8.46%, which is the highest we’ve ever seen. Usually ours sits at around 2.5%. Rental prices were also reduced – by around seven to eight per cent.

In terms of time spent vacant; throughout the COVID period, we hit a peak of around 72 days on market. 


Have you seen anything that could even remotely compare to this period, during other times of your career?

I’ve never seen anything like it before. When I started my career in real estate here in Melbourne, it was such a buoyant market. It was 2009 and there would be lines of people outside rental properties –  20 to 30 people waiting to have a look through one or two bedroom apartments.

And while things are back on track after the pandemic, we still don’t have the same volume of renters looking for properties. 


Is that transient and overseas contingent of the St.Kilda market returning to the same levels, pre-pandemic?

No, it’s still a lot quieter than it used to be. They are a large portion of our renters – travellers, cafe workers – on six month leases. We do a lot of fully furnished properties, and they’re the ones sitting on the market for a lot longer than the unfurnished properties, with the longer term tenancies. 


More broadly, across Melbourne, what do you think is driving the overall turnaround in your opinion?

Population growth, first and foremost. We’re just seeing more people coming into the country now. So we’re able to actually get a lot more people through our properties and secure great renters for our clients. 


At Wakelin, we’ve been noticing increasing inquiry from an investment perspective more recently, is that your experience too?

Yes, we certainly have. I wouldn’t say huge volumes, but definitely a lot more than previous.


Is the rebounding rental market a trend we’re likely to see continue to build?

Yes, already off the back of the last half of COVID, we’ve put through around 150 rent increases over the last six months. Rents are going up. These aren’t dramatic increases, we’re probably talking about $15 to $25 increments per week, but they are starting to go up gradually.


I’d imagine the more gradual rises are appreciated. Sharp and sudden increases may push renters to look for alternative accommodation. 

Yes, agreed, we don’t want that. Our advice is, if you have a good tenant, if they’re paying their rent on time and looking after the place – keep them in the property. 

A rent increase may not be the only option. Rental providers may find it better to introduce lower increases spanned out over a two or three year period.


Have renters’ expectations changed since COVID-19?

With regards to the rental prices, we’re having less negotiated terms with renters now. Over the COVID period, it was typical to have renters negotiate their rents down quite considerably. We’re now able to secure renters for our rental providers at the set price. 


What impact are the State Government’s minimum standards for rental accommodation, introduced last year, having? 

For me, having been in this job for the last 14 years, I think that the new legislation changes were excellent. It’s forced a lot of our rental providers to bring their properties up to standard, which has only attracted even better renters for their properties. So it’s a win-win for both parties. 

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