Melbourne’s Rental Outlook for 2025: Competitive Yet Evolving
In 2025, Melbourne’s rental market continues to demonstrate strong demand, even as vacancy rates differ widely across its suburbs. With supply constraints and increasing population pressures, both investors and renters face a fiercely competitive environment.
Key Rental Insights for Melbourne (2025)
- Vacancy Rates: Ranging between 1.2% and 2.5% across metro Melbourne
- Market Benchmark: A balanced rental market is around 3%, highlighting robust overall demand
Suburb-Specific Vacancy Trends
| Suburb | Vacancy Rate (%) | Notes |
|---|---|---|
| Hawthorn East | 3.59 | Softer demand, rents declining |
| Maribyrnong | 3.49 | Higher vacancies |
| Avondale Heights | 3.4 | Softer market |
| Armadale | <2 | Tight market, rising rents |
| Toorak | <2 | Strong rental growth |
| St Kilda East | <2 | High demand |
| Fitzroy | <2 | Competitive rental zone |
- Rental Prices: The median rent is roughly $580/week for houses and $550/week for units.
- Annual Rent Growth: Hotspot suburbs like Armadale, Toorak, and Fitzroy are witnessing increases of 6–8%.
What’s Driving the Market?
- Population Growth & Migration: A rebound in international students and new residents is fuelling demand.
- Limited Supply: Developers are finding it difficult to match the growing market demand.
- Households Sharing: More people are renting together to manage rising living costs.
National Vacancy Rate Snapshot (March 2025)
| City | Vacancy Rate (%) |
|---|---|
| Hobart | 0.5 |
| Perth | 0.6 |
| Adelaide | 0.6 |
| Brisbane | 0.9 |
| Darwin | 0.8 |
| Sydney | 1.3 |
| Melbourne | 1.5 |
| Canberra | 1.5 |
| National Avg | 1.1 |
Although Melbourne’s market is tighter compared to cities like Sydney and Canberra, it remains more accommodating than most other Australian capitals.
Final Thoughts
Melbourne’s rental environment is vigorous and competitive, yet it varies greatly from suburb to suburb. Detailed, suburb-specific insights are invaluable for investors looking to maximize returns in an ever-shifting market.
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