Melbourne’s rental market remains tight — but as previously reported the rate of rental growth is beginning to ease. The annual change in the last 12 months is 2.0% with lowest it has been for several years.  

Melbourne rents rose 0.3% in April, bringing annual rental growth to 2.0%, which is down from a whopping 9.4% a year ago.

How does Melbourne compare to other capitals? 

• Brisbane continues to be one of the toughest rental markets in the country. Rents rose 0.8% in April and are up 10.6% over the past year. 

• Sydney, which has seen some of the steepest rental hikes since the pandemic, posted 1.0% growth in April, bringing annual growth to 9.0%. 

Vacancy rates remain critically low 

Melbourne’s vacancy rate sits at just 1.34%, well below the decade average and only slightly up from record lows seen earlier this year. This is keeping pressure on rents and making competition fierce, particularly for houses in family-friendly suburbs and well-located apartments close to public transport or universities. 

Tenants still feeling the squeeze 

Despite the slight easing in growth rates, renters are still facing tough conditions: 

• The median rent in Melbourne is now $604/week, up from $525 a year ago. 

• The gross rental yield in Melbourne is now sitting at 3.7%, up from 3.3% this time last year — a sign that rent growth has been outpacing the growth of property prices. 

For many tenants, rental increases are hitting affordability limits. As a result, we’re seeing more renters considering share houses, moving further out, or opting for smaller properties to stay within budget. 

For landlords, conditions remain strong — but changing 

Landlords are still benefiting from high demand and low vacancy, but with rental growth slowing and interest rates still relatively elevated, the environment is evolving. Properties that are well-located and well-maintained are leasing quickly and achieving strong returns. Others are starting to sit longer on the market or face pushback on higher rents. 

Where to from here? 

For property investors and landlords, now is a great time to review your rental strategy, notably around fixed term leases, and where possibly we would recommend moving to a fixed term lease where possible.  

For owners with vacant properties, it’s imperative that you adjust pricing quickly to meet the market for where it is, both to avoid unnecessary vacancy but also the risk of a rental listing becoming stale and facing further price reductions.