2024: A year in review for Melbourne's rental market

As we approach the end of 2024, Melbourne’s rental market tells a story of two halves. The year began with steady rent rises fuelled by strong demand, but as months progressed, the pace of growth moderated, vacancy rates edged upward, and the market began to stabilise.

Rents remain strong but growth slows

In the 12 months to September, national median rents rose by 7 per cent, a softer increase compared to the 14 per cent growth recorded for the previous 12 months, according to CoreLogic. Melbourne’s capital city rents reflected this trend, rising by 6.8 per cent to a median of $640 per week. However, quarterly growth slowed to just 1.6 per cent by September, signalling a shift in market momentum.

Vacancy rates have also increased, moving from historic lows of around 1.1 per cent to 1.64 per cent in October, Property Investment Professionals Australia data shows. While still tight by historical standards, this modest rise reflects a gradual increase in rental stock.

Kay & Burton’s Director of Property Management, Cath Stubbings , notes that the rental market remains healthy despite the shift in dynamics.

“Rents are still strong compared to a few years ago, but we’re seeing a growing need for rental providers to meet the market to avoid extended vacancy periods,” she says. “This is particularly important in areas where supply has increased.”

While the growth rate may have slowed, higher rental yields remain a significant advantage for rental providers, particularly in Melbourne’s sought-after suburbs.

“Hotspots like South Yarra, Hawthorn, and Prahran remain tightly held among renters, particularly for well-located, quality homes. Additionally, the luxury rental market has been a standout performer, with premium properties achieving exceptional results in 2024,” Ms Stubbings says.

Navigating legislative changes

This year also brought further rental reforms, adding to the suite of changes implemented in recent years. The latest reforms included banning “no-fault” evictions (requiring 90 days’ notice is required to end a fixed-term rental agreement), capping lease break fees, and introducing mandatory cord anchors for blinds and curtains in rental properties.

While not as extensive as previous rounds of legislation, these changes have added new obligations for rental providers and increased their responsibilities. Staying informed and proactive about these changes has been crucial for maintaining compliance.

The bigger picture: Capital growth and investment opportunities

Victoria’s economic conditions, high property taxes, and interest rate sensitivity created headwinds for capital growth in 2024. According to CoreLogic data, Melbourne house prices fell by 1.1 per cent in the September quarter, contrasting with a 1 per cent national increase.

However, for astute investors, the current market offers opportunities.

“For those who can hold onto their investment properties, the long-term benefits remain compelling,” Ms Stubbings says. “Rents are strong, and over time, we expect capital growth to recover. For those looking to expand their portfolio, 2024 has presented good buying opportunities, with strong value in the market and the prospect of interest rate cuts in 2025.”

Team milestones and growth

This year, Kay & Burton’s Property Management team expanded to meet the needs of our growing client base. We welcomed Megan Taylor and Dylan Archer as New Business Managers, Zoe Westaway to our admin team, and property managers Emma Powis, Carly Bramble, and Max Murphy.

In addition to expanding our team, we celebrated the arrival of two new additions—Nicole Betts welcomed her baby daughter, and Dylan Archer celebrated the birth of his son.

Meanwhile, we welcomed 302 new Property Management clients and helped hundreds of renters find their ideal homes with 697 properties leased, reinforcing our commitment to exceptional service and results.

Looking ahead

As we move into 2025, Melbourne’s rental market presents both challenges and opportunities. Rental providers who remain responsive to market trends and leverage expert advice are well-positioned to achieve strong returns.

With stabilising rents, increasing vacancy rates, and potential interest rate cuts on the horizon, now may be the time to explore opportunities in Melbourne’s property market.

For renters and providers alike, 2024 underscored the importance of adaptability in navigating Melbourne’s ever-evolving rental landscape.

In compiling this article, Kay & Burton relied upon information supplied by several external sources. This article has been provided for general information only and has not been tailored to your personal circumstances. Although high standards have been used in the preparation of the information, analysis, views, and projections presented in this article, Kay & Burton does not owe a duty of care to any person in respect of the contents of this document and does not accept any responsibility or liability whatsoever for any loss or damage resulting from any use of, reliance on, or reference to the contents of this article.