The Department of Health and Human Services has released its June 2021 Rental Report for Victoria. What can property owners expect from the findings therein?
01. Median Rent in Victoria is Up
Median rent values for properties across Victoria have risen in June 2021. In Melbourne, the weekly rent decreased by $5 to $395 whilst in regional Victoria rent values increased by $10 to $360 per week.
As a prospective dual occupancy owner in Victoria, this means you could potentially see your rental income increase by $40-80 per month, depending on whether you’re letting one or two of your properties.
Note that this increase is marginally higher than in the previous 12 month period, by about 9.3 per cent according to the Regional Rent Index (RRI).
02. More New Lettings Opening Up
In Regional Victoria, 57,615 new lettings opened up in June 2021, an increase of 13.3 per cent since June 2020. It is interesting to note that the number of new lettings in metropolitan Melbourne have increased by 19.9 per cent, where 85.3 per cent of all new lettings were listed. In Regional Victoria, new lettings are down 14.0 per cent.
What this means is that more and more developments are taking place for tenants and owners in Melbourne, despite rental values decreasing marginally.
03. Increased Tenancy Turnover Rates
Tenant turnover rates for lettings in Victoria and Melbourne have increased, meaning that tenants are renting and leaving rental properties with greater frequency. In Melbourne, the turnover rate reached 9.7 per cent in June 2021, up marginally from 8.6 per cent in June 2020. Similarly, turnover rates in Regional Victoria have increased to 7.8 per cent, up from 7.3 per cent in June 2020.
In real terms, the median duration of tenancy in Melbourne and Victoria are about 22 months and 20 months, respectively.
Increased turnover rates can cause friction for property owners, since they end up having to list the property to let more frequently. This can lead to increased costs since the property may sit vacant, as well as costs associated with listing the property to let.
04. Vacancy Rates are Down
It seems that the demand for rental properties in Victoria continues to increase to meet the existing supply, as evidenced by a decrease in vacancy rates in Melbourne. In metropolitan Melbourne, vacancy rates decreased to 5.2 per cent from 6.4 per cent in June 2020. In Regional Victoria, vacancy rates remain very low at 1.2 per cent, slightly lower than 1.5 per cent in June 2020.
05. Highest and Lowest Median Rents by Region
There is quite a bit of variation depending on location in Melbourne and Regional Victoria. In real estate, the three most important things are, after all, location, location, and location.
2-bedroom flats tend to command the highest median rents in Fitzroy and Port Melbourne, at around $550 per week. In Regional Victoria, the highest median rents for 2-bedroom flats were in Torquay and Ocean Grove-Barwon Heads, at $405 and $400, respectively.
On the lower end of the median rent scale, Melton and Middlesea have the lowest median rents, at $290 and $298, respectively. In Regional Victoria, Morwell and Moe-Newborough have the lowest median rent values at $208 and $220, respectively.
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