Buyers at auction in the best inner and bayside suburbs are haggling tough over price. Agents yesterday reported vendors feeling the pinch in traditionally strong parts of the city. But for the 25 percent of Victorians who rent, the news is worse – rents are tipped to rise at least 10 per cent a year for the next five years. Prices in some usually strong parts of Melbourne have reportedly fallen by 10 per cent this year.
Agents said exceptional properties still sold beyond reserve price, but average houses in average locations were snubbed by buyers. Melbourne’s population increase, combined with declining new housing approvals and investment growth have plunged the rental vacancy rate to less than 1 per cent. Rents in Melbourne are growing faster than in other capital cities. In the year to March, advertised rents for houses in Melbourne rose 18.6 per cent, property monitors Residex reported.
Desperate renters reportedly have been engaged in bidding wars for scarce housing. The Australian Bureau of Statistics said Melbourne’s population was growing by more than 1100 people a week. And the ANZ Bank believed Victoria needed 44,000 new dwellings in 2006-07, but only 39,200 were built. The bank estimated Victoria would need 129,000 new dwellings by June 2010 to meet demand, but only 112,300 would be built. ANZ’s Paul Braddick forecast times were “going to get much tougher for renters”. “This is the worst housing shortage since World War II,” he said.
“We predict there will be double-digit rent rises each year for five years.”
The Victorian Tenants Union chief Mark O’Brien said advertised rents did not represent the real rent rises because tenants were out-bidding each other for properties. “The vacancy rate is so low that advertised rentals are becoming less meaningful,” he said.”The advertised rent can end up bearing no relation to what people pay. “Ten years ago you would not have heard of an estate agent letting individual rooms in a house. The market is so tight it is worthwhile advertising individual rooms.” A spokesman for Victorian Treasurer John Lenders said Victoria’s rents were the “lowest on the eastern seaboard.”