Vacancy rates are still rising in Melbourne as the city struggles to fill inner-suburban apartments

Melbourne city still feels vacant for a reason. (Arterra, Universal Images Group via Getty Images)
  • Despite Melbourne’s reopening, tenants are not rushing back to the inner-city.
  • Vacancy rates largely continue to rise in the city’s inner suburbs, including Stonnington, Whitehorse, Yarra, Port Phillip, and Boroondara.
  • It has helped keep around 27,000 Melbourne properties empty, while Tasmania and South Australia experience increasingly tight rental markets.
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After spending much of this year in lockdown, tenants could be forgiven for not rushing back to Melbourne’s inner city.

While the city’s reopening has managed to reboot the Victorian economy, it has so far been unable to reverse vacancy rates, which continue to rise.

“Despite a significant reopening of the Victorian economy over November and the complete elimination of the coronavirus, Melbourne’s vacancy rate climbed to 4.8 per cent, the highest of all the capitals,” Domain senior analyst Nicola Powell said.

The latest Domain data shows that 4.8% of Melbourne properties, or around 27,000, were empty throughout November – 3% higher than last 12 months ago – and rising even as the city’s stage four restrictions were lifted.

By contrast, that’s more than twice the national average, and nearly 50% higher than Sydney, Australia’s only other comparable city. Significantly, Sydney vacancy rates rose in November as well, albeit off a lower base and without the months-long lockdown.

Melbourne suburbs remain the most vacant across the country, with 14.4% of Melbourne city apartments laying empty. There is now more than five empty apartments for every vacant one this time last year.

In the south-east of the city, nearly one in eleven Stonnington properties can’t find tenants. While vacancy rates continue to rise sharply there, it’s in Whitehorse West, jumping nearly 1% in just 30 days, that tenants continue to leave at the fastest rate.

Combined with Boroondara and Yarra in the east of the city, and Port Phillip to the south, Melbourne remains something of a ghost town.

“These are areas that have a high level of overseas migration and student population, with a significant proportion of the rental demand sourced from overseas,” Powell said.

“These are also areas that have a greater exposure to the industries most vulnerable to the job losses associated with the pandemic.”

On the flip side, the tighter rental markets appear largely to be quieter suburbs, with Tasmanian and South Australian landlords finding themselves spoilt for choice.

“The pandemic has brought upon an abundance of demand for people seeking greater space and laidback lifestyle, as working from home becomes more accepted in our workplaces,” Powell said.

“This is likely to place rental demand across lifestyle regions close to the water, tree-change regional areas and on the outskirts of the capital cities.”