I’m pretty sure most apartment investors are tired of hearing about the decline in rents that ensued in Melbourne through Covid, so when I tuned in to REAs 2022 Market Outlook, I was delighted to see Inner Melbourne on top of the national table for the greatest number of lease deals during 2021 and the largest year on year increase in rent.
During all of 2021 the area defined as Inner Melbourne (SA4 region being the CBD and immediately surrounding suburbs) signed up 63,802 new lease deals, which was over double the next best region being Inner Sydney with 31,447. In fact Melbourne regions being Inner, West and South East made up 3 of the top 6 SA4 regions for new lease deals.
On the rental growth chart Melbourne also topped the table for rental growth during 2021 with seven statistical regions occupying the top 7 spots with Inner Melbourne recording 20.8% rent growth.
While it is correctly argued that these results come off a relatively low base of large vacancies and low rent, it is an outstanding vote of confidence for Melbourne investment property. We have expected Melbourne leasing and rents to rebound post Covid, but these results come well before Australian international boarders open on the 21st February 2022 which will fuel demand even further as people become more comfortable to travel internationally.
To view this chart fast forward to 19:18 of the market briefing here.
The other interesting chart from this briefing (21:19) shows Inner Melbourne accounts for 11.5% of all rent listings in Australia. This is actually down from its peak in mid pandemic / lockdown of 18.5% but still up from pre-Covid level of 6% remembering many new projects have also been completed in this region over that time. It is important to remember however Melbourne’s CBD and immediate surrounds have significantly more apartments than the other comparable CBD areas of Sydney or Brisbane which have a much more dispersed apartment development pattern.