Challenging phase as rental supply tightens and prices rise

All rental property types across Melbourne are in demand, with only overpriced homes staying longer on the market. “Most of our properties are rented out after one inspection,” Simone Buckley, Head of Property Management, Buxton Sandringham, said. “It is a difficult time to be a renter as rents have risen strongly and supply is tight.” In the city’s coveted bayside suburbs and nearby areas, listing numbers have halved in the past 12 months. Buxton Sandringham, with a rent roll of nearly 700 properties, averaged 20-25 listings a year ago. This has fallen to 8-10 listings or lower, Ms Buckley said. 

In September, the office leased 23 properties, including five that were not even listed on the internet because of the strong demand. Its renter profile across suburbs such as Sandringham, Brighton, Beaumaris, Highett, Mentone and Black Rock, includes young families, professional couples and those from interstate and overseas. While most landlords would take the advice of an agent on pricing, those properties that are overpriced tend to stay on the market for longer periods. “Around 80 per cent of rental listings are now getting higher rents than we expected,” she said.

Two stunning Black Rock townhouses that rented out for $1250 and $1550 a week last year were recently leased for $1490 and $1880 respectively. “Rents of $800 a week have now risen to $850-$870, and the increase is 7-8 per cent or more,” she added. “Our rental prices also did not fall during COVID and have now risen.”

While rising interest rates, taxes and other costs have led many dad-and-mum investors to sell their properties, most buyers have been owner-occupiers, leading to less rental supply. And new investors are “sitting back” and not entering the market, Ms Buckley noted.

“To secure a property, many renters are now offering to pay several months’ rent in advance,” she said. The latest PropTrack figures revealed the number of homes in Melbourne being advertised for rent is at a decade low. The total number of rentals listed on realestate.com.au was 20.2 per cent down in September compared to a year ago, and 30.2 per cent below the five-year average for the month. The median weekly rent reached its highest level in September, hitting $500 for houses and $495 for units, compared with $460 for houses and $420 for units 12 months earlier. Melbourne’s 1.15 per cent vacancy rate was also a record low.