As we progress through the first quarter of 2025, the rental market in Melbourne's southeastern suburbs, including those serviced by First National Real Estate Neilson Partners in Berwick, Narre Warren, Beaconsfield, Officer, Hampton Park, Pakenham and surrounds, continues to evolve. Understanding current trends in rental growth, supply, and vacancy rates is crucial for both property investors and tenants.
Insights from CoreLogic’s Housing Value Index and PropTrack highlight important trends, including rental price movements, supply challenges, and factors that will influence investment strategies in the year ahead.
Rental Growth Remains Strong
Over the past five years, rental prices have experienced significant increases, though the rate of growth has definitely started to slow in recent months. For example, January saw a modest 0.4% increase in national rents, a much slower pace compared to previous years. This shift reflects the growing influence of affordability concerns and supply factors on rental demand. Despite the slowdown, annual rental growth still stands at 4.4%, more than double the pre-COVID decade average of 2.0%.
Rental Growth Trends
Recent PropTrack data indicates a notable increase in rental prices across the following suburbs:
Berwick
The median rent for a three-bedroom house in Berwick is $550 per week, reflecting a 7.8% annual increase over the past 12 months.
9 Travertine Loop Berwick for rent $540pw
Narre Warren
Narre Warren has seen median rents of $525 per week for three-bedroom homes over the past 12 months since march 2024, with growth up 9.4%.
Hampton Park
A three-bedroom home in Hampton Park is up 8.9% in median rent to $490 per week over the past 12 months, continuing the trend of other local suburbs.
61 Strong Drive, Hampton Park
Beaconsfield
Beaconsfield, another one of First National Real Estate Neilson Partners popular local suburbs continues the trend with growth of 10% ion 12 months and an average weekly rent of $550.
Officer
With an annual rent yield of 4.3% Officer has a weekly rent of $550 for a three-bedroom home and $492 per week for a unit/townhouse. Officer's median rent is up a whopping 14.9% over the past 12 months, highlighing Officer as a popular option for investor buyers.
5 Timbertop boulevard Officer for rent $590pw
Pakenham
In Pakenham, renters will be looking in the vicinity of $500 per week as a median guide when sourcing a three-bedroom home, marking an 8.7% increase over the past year.
Supply and Vacancy Rates
The Melbourne rental market's supply dynamics are influenced by various factors:
Supply Constraints
Despite a slight uptick in dwelling approvals, challenges such as construction delays, high material costs, and labor shortages continue to limit new housing stock.
Vacancy Rates
Vacancy rates remain at historically low levels, maintaining upward pressure on rents even as affordability becomes a growing concern for renters. In Melbourne, we have seen a small increase in rental listings, providing renters with more options and competition easing slightly.
First National Neilson Partners vacancy rate currently stands at 1.37%.
Implications for Investors and Renters
For property investors, these trends underscore the importance of strategic planning:
Interest Rates
Recent and anticipated future interest rate cuts may offer some relief by reducing mortgage repayments, potentially stabilizing cash flow for investors. However, the easing of rates is expected to be gradual, so many rental providers will continue to face higher mortgage costs and should keep this in mind when planning for the year ahead.
Sustainable Upgrades
Investing in energy-efficient upgrades, such as solar panels and water-saving fixtures, can attract environmentally conscious tenants and enhance property value.
For renters, staying informed about market trends and exploring options in emerging suburbs, like Officer South and Pakenham East, may provide more affordable housing opportunities.
While rental growth may be easing in some areas, strong demand coupled with limited housing supply will continue to drive market conditions. Investors who focus on maintaining well-managed properties, making reasonable rent adjustments, and staying informed about emerging market trends will be in a strong position for success in 2025.
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