Rent crisis: Vast majority of Victoria now home to ‘extreme rental pain’, but silver lining for Docklands

May 7, 2024

More than three-quarters of Victoria is now in extreme rental pain after the state notched the second-fastest rent rises in the country across the past year.

But there are signs that plans for the state to build its way out of a housing and rental crisis are taking effect, with the government approving plans on Monday for a pair of tenants-only towers in Docklands with a combined 925 homes.

Combined with past approvals, there could be more than 2000 homes purely for renters coming to the city-side suburb.

 

But tenants struggling to find an affordable home are likely to languish for a while yet, with SuburbTrends’ latest Rent Pain Index finding four Victorian regions, including Heathcote, Dandenong, Templestowe as well as the Newcomb and Moolap area of Geelong are now at the highest level of rental pain the index can track.

Devised by respected housing data analyst Kent Lardner, it assesses rental increases in the past year, vacancy rates and rental affordability as a share of typical incomes in an area to establish a number from 1 to 100, with higher scores equating to worse conditions for tenants.

In addition to the four with a score of 100, there were a further 22 that were ranked from 96 to 99 — and a whopping 78 per cent of Victorian regions scored above a 75.

“A score of 100 is awful to be in, awful to be searching for a home in, and you will be worried about the next rent review,” Mr Lardner said.

 

VICTORIA’S WORST RENTAL PAIN REGIONS

Heathcote – 37% of income – 100% pain

Dandenong South – 37% of income – 100% pain

Templestowe – 35% of income – 100% pain

Newcomb-Moolap – 35% of income – 100% pain

Doncaster – 38% of income – 99% pain

Maryborough – 37% of income – 99% pain

Clayton-Notting Hill – 35% of income – 99% pain

Sebastopol-Redan – 34% of income – 99% pain

Sandringham-Black Rock – 34% of income – 99% pain

California Gully-Eaglehawk – 34% of income – 99% pain

Source: SuburbTrends Rent Pain Index May


In a further blow, he said while tenants in Victoria’s toughest rental markets were paying up to 38 per cent of their wage on rent, interstate it had surpassed 40 per cent — indicating rents here could be set for further rises.

This would follow a 12 per cent increase in the past year that marked the state as home to the nation’s second fastest growing rental costs, with only WA worse.

 

However, there was a slight silver lining for tenants yesterday, as the state government approved a 925-home pair of tenants-only towers by developer AsheMorgan in Docklands.

The development also includes plans for retail space and a public plaza at ground level.

24 Little Docklands Drive, Docklands - for herald sun real estate

 

The nod is thought to bring the number of homes either under construction or consideration and being set aside for renters in the suburb past 2000, with additional build-to-rent projects by developers including Lendlease, Salta Properties and Tim Gurner also in various stages.

Charter Keck Cramer analysis has tracked a rapid rise in build-to-rent, or tenants-only developments in Melbourne. There were 580 apartments completed in 2023, while about 13,900 apartments are expected to be completed in the next three years.

Another 18,200 are either approved or in the early stages of the planning process.

Planning minister Sonya Kilkenny said Victoria was leading the nation in build-to-rent, but that they would continue to look for other ways to boost housing supply.

“As long as rental supply is low, rental prices will stay high,” Ms Kilkenny said.

“That’s why we’re approving and delivering more homes for renters in established suburbs, close to jobs, transport and services and ensuring they include affordable housing for Victorians who need it most.”

Mr Lardner said while any further housing construction for build-to-rent homes was a good thing — it was unlikely homes would be built to suit tenants looking for affordable options, and they would take time.

“We need things for the pipeline, but we need a hell of a lot right now — otherwise you just have tents and cars,” he said.

 

Source: realestate.com.au

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