Melbourne city has depicted incredible rise in rent, especially within second-tier suburbs that are known to harbor top-regarded schools. Many Melbourne families have witnessed this speeding hike in rent over the last year alone with suburbs like Eaglemont witnessing a 30.4 % rise to a median weekly asking price of $665 as depicted by Domain Group Data. The contagious rent increase has affected other suburbs as well and a typical house in places like Burton, Mont Albert, East Melbourne, Ivanhoe and Elsternwick cost 20% more than they did a few months back.
Why the rise?According to Jason Petit of Ivanhoe, the Ivanhoe Grammer School is one of the major elements increasing house rents within the suburb. Apparently, highly rated schools are quite attractive and pull parents into such areas as East Eaglemont. Another reason for the demand is the existence of large family houses, double-storey 4 and 3 bedroom houses and large blocks of land as immediate the surrounding of the home.
Evidentially, Jason added that there are only a few rental properties within the suburb which immediately results to aggressive pricing as families are always ready to snap away such opportunities whenever they surface. Moreover, home auctions have become quite competitive with low interest rates. Outbid families have no other option than to jump to rental properties awaiting market settling. In places like Ashburton, house rents rose by over 25% to a staggering $620 per week.
The widespread impact As Steve Burke (Director of Iris) states, people want to live close to their families or somewhere nearby when they cannot afford to live where they grew up. The rising rents in Melbourne go as far as Camberwell and Malvern. Mr. Burke spoke in reference to the recent lease, of a 4 bedroom house for $1200 a week in Ashburton, the agency made. Another house that sits on a 1473 square meter piece of land in Ashburton was leased for a striking $1995 per week. According to Andrew Wilson (Domain’s chief economist), the strong prestige market for lighter weight houses is partly reason for the price increase. While traditional-style homes were struggling a bit, the modern prestige houses have been on high demand over the past 12 months.
Understandably, the new models come with a range of fancied appliances allowing landlords of new houses to raise the rent above landlords of older houses. Nonetheless, the hike is streamlined across Melbourne and even traditional style homes have soared up above 20% with rents that reach $400 per week. Jodi Sherr (rental department manager at Hodges Caulfield) advised landlords of old-style houses to conduct renovations to their old models if they are to compete with the new landlords.