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Landlords struggle as rents stagnate

22 January 2015 Staff Reporter

Landlords in one capital city are facing a bleak outlook, as weekly rents fall or stay flat in some of the city’s prime locations.

High levels of apartment construction are affecting rental growth and vacancy rates in Melbourne, the Domain Group Rental Report data shows.

The December 2014 quarter report shows the median weekly asking rent for houses remained at $380, while unit rents dropped 1.4 per cent to $360.

Over the past year, rental growth rates for houses were also flat, and unit rents increased just 2.9 per cent.


With December vacancy rates tracking at 3.9 per cent for Melbourne units compared with 2.1 per cent for houses, tenants looking at the former would appear to have more choice.

Domain Group senior economist Andrew Wilson said an increased supply of new apartments in Melbourne would continue to affect landlords facing prospects of lower rental growth. 

"Once it starts to impact on rents, it becomes bad news for developers because investors aren't interested in a falling rent environment, as well as the issues to do with prices," he said. 

Investors who swooped on units in the inner city five years ago would have had only a rental increase of 7.7 per cent over the period, compared with landlords in the south-east and outer east who enjoyed rises of 16 per cent and 12.9 per cent, respectively.

Source: Domain Group Rental Report

Landlords struggle as rents stagnate
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