A reduced vacancy rate has driven median rents up, according to the March quarter Rental Market Update from the Real Estate Institute of Victoria (REIV).
According to the report, the vacancy rate in Melbourne was 3.6 per cent in January, however by March it had dropped to 2.8 per cent.
With three per cent often considered to be a market at equilibrium, dropping below the threshold has driven rents up 3.7 per cent from $381 per week to $395 per week for houses.
The greatest tightening was recorded in the inner city where the vacancy rate dropped from 3.8 to 2.9 per cent, the median house rent consequently rose by 1.5 per cent to $530 per week.
In the middle suburbs there was a drop from 3.9 to 3.1 per cent and a 3.7 per cent rise in median house rents. The outer suburbs were more stable with a smaller change in the vacancy rate from 2.6 to 2.3 per cent.
Median rents were essentially stable around $340 per week.
According to the REIV, the only area where the vacancy rate rose was along the Mornington Peninsula, where it increased from 2.9 to 3.6 per cent.
In regional Victoria the vacancy rate fell from 3.6 to 3.3 per cent and median house rents stayed stable at $300 per week.
Of the three main regional centres, the highest vacancy rate was recorded in Geelong where it rose from 2.9 per cent in January to 4.0 per cent in March.
In Bendigo there was a drop from 3.6 to 2.8 per cent, which is similar to the change in Ballarat from 3.6 to 2.4 per cent.
Whilst the level of vacant properties has increased, according to the REIV the overall vacancy rate indicates a reasonably balanced market.