How is the Rental Market Looking for 2022?

Are you feeling a bit depressed about the rental market in Melbourne? Wondering if it’ll ever recover after the hounding it’s had for the past two years? What will this year hold?

If you’re biting your fingernails and wondering what’s in store, you’ll be pleased to know that the predictions for 2022 are good. Of course, there are as many opinions as there are people to give them, but there are some definite positive trends emerging that indicate that this year will see Melbourne’s rental sector make a comeback.

In the real estate world, the new year has kicked off to a good start. According to Tim Lawless of CoreLogic, January saw the national measure of housing values rise by 1.1% in January, which is very positive. January is traditionally the quietest month on the real estate front, so the coming few months will be critical in setting the pace for the remainder of the year.

Now, back to the rental market…

As our country, and Melbourne in particular continues to emerge from a series of prolonged lockdowns, consumer confidence is high. Most of the state borders have opened again, and people can now move interstate freely. Overseas travel is resuming, and international students are once again able to enter the country. As we adapt to this new ‘normal’, the demand for rental properties is predicted to increase. Folks who have put off moving for employment or other reasons, and those embracing a lifestyle change are now able to do so. And of course, returning expats and migrants will also fuel the demand for rental accommodation.

How Will the Extra Demand Change the Market?
The increased demand will naturally result in stronger competition between renters, and it’s forecasted that an increasing number of tenants will enter into longer lease agreements than usual (2 – 3 years rather than the regular 12-month lease we are used to) to secure their property. We are also likely to see substantial rises in rental rates, due to the increase in demand – if renters want the property, they’ll have to pay for it!

Have Tenants Moved Away from the City?
In the past, Melbourne suburbs close to the city, or with convenient public transport connections to the city have generally been more popular and commanded higher rental rates. But this has changed during the past two years.

In recent times, we’ve seen a drop in city rental demand and rates, and here’s the reason: many CBD workers have found that they can work effectively from home, so proximity to the office is no longer a top priority. With convenient commuting no longer paramount, a certain portion of working-class renters have broadened their horizons and opted for larger properties in the outer suburbs that offer more elbow room and greater privacy. Now, even as many inner-city offices return to pre-covid staff numbers, many Melbournites are loving their newly found work-from-home arrangements and opting to travel into the city only once or twice per week, so the need to be close to the CBD
is no longer pressing.

However, as restrictions continue to be lifted, we’ll see the inner-city rental market bounce back. The return of migrants and students will certainly boost the market. As will the inevitable drawcard of luxurious city living and proximity to restaurants, sporting events, cafes, and the endless stream of social activities.

And What About the Detached Housing Space?
Housing prices across the country are forecasted to remain high for the remainder of 2022. In fact, according to a report published by CoreLogic at the end of January, national housing values reached a new cyclic high, with Australian house prices up 22.4% over the year.

In Melbourne, an increase in the number of listings is offering buyers greater choice, however, competition remains strong, with 2022 seeing more than the usual number of properties sold under the hammer in the first few weeks of January.

Want to know more about the rental market in Melbourne? Wondering when is the
best time to buy or sell? Contact the team at Love & Co today