Renters are flocking to Melbourne’s student-heavy areas, Domain data shows, as national rental vacancy rates hit pre-pandemic lows

  • Australia’s rental vacancy rate has fallen to pre-pandemic levels, according to Domain.
  • Melbourne remains a unique outlier, with a residential rental vacancy rate of 3.8%, and a faster downturn than any other capital city.
  • Data suggests Victorian renters may be flocking to traditionally student-heavy suburbs left empty by border closures.
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The slack in Australia’s rental market has all but evaporated, with the national residential vacancy rate now sitting at pre-pandemic levels.

But, as should be expected through the pandemic era, Melbourne has provided a unique exception to the rule.

New figures from Domain show the national rental vacancy rate fell to 1.7% in May, matching levels last seen in February 2020.

Sydney’s market continues to tighten, with just 2.7% of rental properties across the city sitting empty — a massive downturn from the high of 4% experienced in April 2020, when border closures and uncertainty over the pandemic saw demand plummet.

Brisbane vacancies are also contracting, with the figure dropping 0.1% to 1.3% over the month. The rate remains below 1% in Perth, Adelaide, Hobart, Canberra, and Darwin.

The main outlier is Melbourne, the city which experienced the most drastic lockdown conditions through 2020 — and the capital currently slogging through another round of restrictions.

For the Victorian capital, the data is mixed: with a vacancy rate of 3.8%, a higher proportion of Melbourne rentals sit empty than in any other city.

Yet Melbourne is also experiencing the fastest downturn in vacancy rates, with the figure plummeting nearly 1% over the past three months.

While Melbourne’s universities face massive deficits linked to the loss of international students, Domain data suggests some locally-based students may be taking advantage of empty accommodation near study hubs.

“The inner city and suburbs surrounding Monash University’s Clayton and Caulfield campuses had led the charge in the recovery of Melbourne’s vacancy rate,” said Henry Yu and Nicola Powell, authors of the Domain report.

Citing national interest on competing property portal RealEstate.com.au, REA Insights economist Paul Ryan said “the level of demand remains much higher than it was prior to the pandemic,” Ryan said.

“This is surprising given that foreign students – traditionally a strong source of rental demand in inner-cities – remain unable to enter the country.”

Another factor may be tilting Melbourne’s rental vacancy downwards, too. Speaking to the Australian Financial Review, Domain’s Powell said landlords may simply be selling up, taking advantage of an elevated property prices and removing empty properties from the market.

Victoria’s fortnight-long lockdown, if extended, could again force renters to seek cheaper options or move in with friends and families, driving vacancies back up.

But “once border closures are removed, expect rental demand to increase again – particularly in inner-city areas previously popular with students,” REA Insight’s Ryan added.