The 2014 Melbourne rental market

The 2014 rental market in MelbourneKey facts

  • Median advertised rent for a house in Melbourne $448
  • Median rent for house rise 2.5 per cent in 2014, units 1.9 per cent
  • Melbourne yields lowest of all capital cities

 

Historically speaking, the performance of last year’s rental market in Melbourne was relatively moderate.

In the last three months of 2014 the median advertised rent for a house in Melbourne increased by a minor 0.3 per cent to $448 per week, the opposite to the -0.3 per drop in the unit market.

September’s result is reflective of the broader performance of the rental market over 2014 where low rental growth and low yields persisted.

Over the course of 2014 house rents increased by 2.5 per cent and units increased by 1.9 per cent.

For houses, 2014 was not dissimilar to the past five years. On a annualised basis, rents rose by 2.5 per cent in 2013, 1.3 per cent in 2012, 2.7 per cent in 2011. The only year that recorded a substantially different result was 2010 when rents grew 5.5 per cent.

The unit market recorded similar results.

In many respects the rental market is following the changes in value seen in the ownership market. With the exception of the unit market, the last two years were similar and 2010 saw boom-like conditions.

Similar to the ownership market, the biggest question for 2015 is whether the growth in supply in the unit segment will further moderate advertised rents.

Yields remained low. For both units (4.2 per cent) and houses (3.3 per cent) the yield in Melbourne is the lowest of all capital cities. This does not seem to concern investors who are clearly focused on the longer term prospects for capital gains.

Robert Larocca
CoreLogic RP Data Victoria Housing Market Specialist

About Robert Larocca

Robert Larocca has built a profile over the past eight years as an expert on the Victorian residential property market. He worked for the REIV both directly and as a consultant over 8 years acting as a spokesperson, managing its research department and public policy. He has been a media and government relations consultant and spent a decade working across the three levels of government including as a Councillor and Mayor in the City of Moreland. He has well developed leadership skills in the not for profit sector and has been the Chairperson of CERES Community Environment Park for 9 years.

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