Chat with us, powered by LiveChatSoutheast rental market booms a year into amended Residential Tenancies Act

Southeast rental market booms a year into amended Residential Tenancies Act

Investors buoyed by rising rentals and lower vacancy rates

Melbourne’s southeast corridor has seen a boom in the rental market as investment properties achieve ‘higher than usual’ rental prices and lease quicker.

Since the amendments to the Residential Tenancies Act came into effect in March 2021, some investors have opted to sell, leaving a shortage of available leasing properties.

Vacancy rates for Melbourne’s southeast were at 1.1 per cent as of January 2022, compared to 2.2 per cent in December 2019, according to SQM Research data.

The market is ripe for investors, according to Barry Plant Berwick Property Management and Department manager Sara Press.

“Compared to previous years, we are in what we call an Investor’s market, where we have more renters to properties,” she said.

“Our database currently has 2449 ‘current’ prospective renters, and over the past 90 days we have had 7199 prospective renters logged on our database.”

With the pent-up demand, rental providers also have the option to save on advertising fees with off-market leases.

“We can push properties out to the database and receive enough interest and qualify renters prior to showing them the home,” Ms Press said.

“This also allows us to better manage leasing consultants' times by saving on hosting numerous open homes.”

While inner Melbourne’s rental market took a blow during the pandemic, dropping 2.4 per cent annually, the outer suburbs of Pakenham, Berwick and Drouin have been on the rise.

“Pre-Covid the average weekly rent increase would be a maximum of $10, they have since climbed between $30-$50 per week,” Ms Press said.

“This market is great for investors because the demand is there, but the supply isn’t, it’s much more competitive which is ultimately boosting the price.”

At least 50 per cent of new business is coming from referrals from the sales department, with investors purchasing in new estates, Ms Press said.

“As we are coming up to a year into the change in legislation, the impact has softened and there is a greater understanding as to why these standards have been implemented,” she said.

“With the new investors coming into the market, there is a general understanding that this is what the legislation is, and it is seen as the norm now.”

For outer Melbourne suburbs, the median weekly rent increased 5 per cent for houses to $420 and 4 per cent for units to $390, in the December 2021 quarter, according to Real Estate Institute of Victoria data.

Regional Victoria reported an 8.3 per cent rise in median weekly rents for both houses and units in the year to December 2021.