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PPG_Blog_Sept_image 5_rental market update

Melbourne’s overall vacancy rate in August increased slightly from the previous month to 3.7%, but is still down from April’s peak at 4.4%. The Real Estate Institute of Victoria reports in its June quarter analysis that inner suburbs in the 4-10km range continue to remain steady around the 3% mark rising in June to 3.2% from May’s 2.4% and previous figures in 2013 ranging from 2.5 to 3.6%.

Meanwhile vacancy rates from 10km out of the city’s centre and down to the Mornington Peninsula have risen slightly to an average of 3.4% from May’s 2.8%, but remain lower than January’s high of 3.6%. Average vacancy rates for all of Victoria are at a similar level of 3.5%, up 0.4%, which suggests relatively uniform levels of market supply and demand across the state.

At the same time, rents achieved for two and three bedroom houses in the 0-20km Melbourne radius has remained relatively static (attracting median rents of $350 to $570 per week) for the June quarter with minimal fluctuations over the previous quarter – albeit with steady year on year increases of 1.4 to 3.6%.

Properties attracting the highest quarterly increases of 2.8% have been two-bedroom houses in the middle to outer suburbs, averaging $350 per week, seemingly balancing out a 2.9% decrease in average rents for two-bedroom flats down to comparable a rental rate of $340 per week.

Although there have been some signs of softening in outlying areas, all of this suggests that the rental market is holding steady. Our sales teams are observing increased activity in the market from investors as buyers enjoy record low interest rates together with a general improvement in consumer confidence.

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