The rental market has been on a tear since the beginning of the year, but apartment owners aren’t taking out any more loans to keep up with the demand, according to a new report.
The latest Australian Institute of Rent Economics (Airtel) data shows a 10 per cent rise in new apartment sales between February and March this year, as the number of people seeking to rent increased by 17,000.
Airtels data also shows a significant increase in the number and type of apartment properties being rented, with the number doubling from 1,828 units in the 12 months to March to 3,923 in the same period last year.
As of March 1, the total number of apartments in Melbourne had increased by 888, with nearly all of the growth occurring in the inner city.
While the growth has been more rapid in Melbourne’s inner city, it’s not a surprise that people are seeking out apartments in other parts of the state, particularly in the outer suburbs of the CBD and south of the city.
“A big part of the story is that the rental market is really saturated with properties, particularly the inner cities,” Mr Grewal said.
“The outer suburbs are the hotbed of demand, especially for new developments.”
It’s been fairly consistent for the last few years, but in terms of the rental growth rate in the last 12 months, it was quite a different story.
“People are going into more apartment properties and those are being more expensive, but they are also being more available.”
Mr Grewel said a major factor was the introduction of a tax on rental properties, which will see the rate of rent rise by a maximum of 15 per cent to 50 per cent over four years.
“That will push more people into these apartments,” he said.
The Reserve Bank has also raised the minimum wage to $11 an hour by 2019, with more changes on the way in the coming months.
Mr Grawal said while people in Melbourne were still experiencing a strong rental market, there were still many people in the CBD who were renting for just under $200 a week.
“What’s really interesting about Melbourne is it’s been relatively quiet for the past few months, but it’s going to be a bit more active in the next few months,” he explained.
“There’s going be more competition for apartments, and more people looking to rent.”
Mr Faull, who is a member of the National Property Council and has a mortgage of $1.5 million, said he expected to continue to see a surge in interest in rental properties as the housing market stabilised.
“We’re definitely seeing some activity in the rental sector, particularly for apartments,” Mr Faulds said.
“We just saw an increase in new listings in Melbourne.”
So it’s quite exciting that we’re seeing more people wanting to live here.