Why the suburbs with the biggest fall in rents since the pandemic were in inner city Melbourne

The postcodes with the sharpest falls in weekly rent since the start of the pandemic were all in trendy areas of Melbourne.

Compared with Sydney, the Victorian capital was even more reliant on international students before Australia’s border was closed to foreigners in March 2020.

The 20 suburbs with the sharpest falls in weekly rent were all in inner-city Melbourne as demand for apartments plunged, CoreLogic data showed.

Melbourne has been locked down six times in less than two years, giving it the dubious distinction of enduring the world’s longest lockdown.

With residents confined to their homes, apartments near the city had fewer takers. 

By October 2021, median inner-city weekly unit rents had fallen by $91, or 18.1 per cent, to $413 – a level $6 below greater Melbourne’s mid-point price for apartment leases.

CoreLogic director of research Tim Lawless said Melbourne’s rental market had been particularly dependent on international students before the start of the Covid pandemic.

‘Melbourne was attracting the largest number of net overseas migrants, with a large portion of these students and visitors who gravitated towards inner city rentals,’ he said.

Australia’s border was also closed just as new apartments were completed near Melbourne’s central business district.

‘The rise and subsequent fall in inner-city unit rental listings was most evident in Melbourne,’ Mr Lawless said.

Compared with Sydney, the Victorian capital was even more reliant on international students before Australia’s border was closed to foreigners in March 2020 (pictured is an empty shopping mall at Docklands)

‘The larger surge in inner city unit listings across Melbourne is likely a factor of a more substantial demand shock attributable to stalled overseas migration, along with the recent unit construction boom being largely concentrated within inner city precincts such as the Melbourne CBD and surrounding suburbs.’

Central Melbourne had the biggest fall in rent of 22.4 per cent, based on an Australian Bureau of Statistics breakdown of individual suburbs.

This was followed by Carlton (down 18.4 per cent), Southbank (down 18.3 per cent), Docklands (down 16.5 per cent), North Melbourne (down 13.8 per cent).

Double-digit falls were also recorded in Flemington (down 12.7 per cent), Albert Park (down 12.5 per cent), East Melbourne (down 12.3 per cent), South Yarra west (down 12.2 per cent) and South Melbourne (down 11.8 per cent).

Sharp drops also occurred in South Yarra east (down 9.7 per cent), Brunswick (down 9.5 per cent), Brunswick East (down 9.4 per cent), Parkville (down 9.3 per cent), Port Melbourne industrial (down 8.8 per cent), Caulfield (down 8.6 per cent), Clayton (down 8.5 per cent), St Kilda (down 8.4 per cent), Collingwood (down 8.2 per cent) and Armadale (down 8.1 per cent).

Mr Lawless expected rents in inner-city parts of Melbourne to rise again when Australia’s border was eventually reopened to foreigners.

‘Rental demand for inner-city tenancies is likely to increase further as the CBD’s and inner suburbs become more vibrant as restrictions ease and workers gradually return to work,’ he said.

‘Once international borders open more fully, its likely demand for inner-city unit accommodation will rise more substantially, especially as foreign students and international visitor numbers start to lift.’

The 20 postcodes with the sharpest falls in weekly rent were all in inner-city Melbourne as demand for apartments plunged, CoreLogic data showed (pictured is St Kilda where rents fell 8.4 per cent)

Melbourne has been locked down six times in less than two years, giving it the dubious distinction of enduring the world’s longest lockdown (pictured are housing commission towers at Flemington where rents have fallen by 12.7 per cent)