Inner Melbourne Apartment Rents Jump 10%
Southbank and Docklands were among the fastest-growing rental markets in Australia.
Southbank and Docklands were among the fastest-growing rental markets in Australia.
Rent for Melbourne’s inner-city apartments has increased by more than 10% in the last 12 months according to data from CoreLogic.
The lift in asking apartment rents in suburbs such as Docklands and Southbank, comes from increased demand from tenants now priced out of the detached housing market.
Rental growth was particularly strong in the December quarter with Southbank and Docklands up 3.8% and 3.7% respectively to a median rent of $454 and $471 making them among Australia’s fastest-growing rental markets.
According to CoreLogic’s research director Tim Lawless, the inclusion of many of Melbourne’s inner-city comes from a turnaround in rental trends.
“Inner-city Melbourne units rents fell by 24.2 per cent as high levels of unit supply met headlong with a rental demand shock as international borders closed and domestic demand swung towards lower density options. Since that time inner Melbourne unit rents have rebounded by 8.5 per cent,” Mr Lawless explained.
The Melbourne market outperformed all other capitals, posting a 1.6% rise in rents over the 12 month period.
However, rents in the Victorian capital remain 5.5% below the record high of July 2019 and with pricing still lower than pre-COVID-19 levels, there is room to grow according to Mr Lawless.
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Ray White’s chief economist outlines her predictions for housing market trends in 2024
Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.
Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.
“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”
Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”
Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”
Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.
Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”
The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”
For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”
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