A review of the state of the rental market over the past decade highlights the problems that every renter knows: the rental market is in a severe state of imbalance, with too few homes and increasing rents.
A few facts will help to show this. In April the vacancy rate for Melbourne was 1.6 per cent, bringing to 64 the number of months since it was above two per cent, in December of 2005. Over this time the vacancy rate was, on average, 1.4 per cent compared with an average of 3.6 per cent in the first half of this decade.
Similar vacancy rates were reported in regional Victoria – except for the first half of the decade, when there were fewer vacant rental homes than in Melbourne.
It is clear that a fundamental shift occurred in the rental market five years ago, when the State’s population started to increase – an increase that has not been met by a commensurate increase in new homes.
From the perspective of a renter, that shift is best expressed in the increase in rental costs. According to the Victorian Office of Housing, in the first half of this decade the Metropolitan Rent Index increased by 20 per cent and then by 45 per cent in the second half.
Rents have not risen to the same degree in regional Victoria, with a 32 per cent increase in the Regional Rent Index in the first half the decade compared to 26 per cent in the second half.
The only solution to this problem is an increase in the construction of new homes in existing town centres and in the city’s growth corridors.
