Victorian regional rents rise after tree replacement boom, interest rates rise

She noted that in some popular areas, annual growth is now in the single digits after a previous boom. Rents on the Surf Coast are up 3.3 percent in a year to average $620 a week, while the Macedon Ranges are up 4 percent at $520 a week.

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Rents are now reaching an affordability level for many renters, forcing some to share an apartment or look for another property type, she said.

“Most areas have seen increases of over 30 percent over the past five years,” she said. “Here you can see the affordability limit and the burden on the residents who cannot keep up.

“We haven’t built enough social housing for those on lower incomes – the most vulnerable Australians working in the private rental market.”

She added that natural disasters like last spring’s floods in the Victoria region can also force people out of their homes and into the rental market.

In Euroa, in County Strathbogie, there are few apartments available for rent and costs have risen.

Ray White Euroa’s Shane Thomson said renters could find a three-bedroom house for around $350 a week 12 months ago, but now they could expect $450 or even more.

When the sales market was buoyant during the housing boom, investors jumped at the opportunity to make money and sell to owner-occupiers who flocked to the area, which has reduced the supply of available rental properties, he said.

Rate hikes have also prompted landlords to review rents, he said, especially when a property became vacant while tenants sharing a home filled their vacancies to cut costs.

“As rents go up, it often becomes more difficult for people on a single income to enter the private rental market,” he said, calling for more public housing in the area.

Rental growth has slowed in hotspots like the Surf Coast.

Rental growth has slowed in hotspots like the Surf Coast.Credit:Jason South

In Echuca, in Campaspe County, investors were also selling while home prices were moving, said Allison Minter, director of LJ Hooker Echuca.

Rate hikes added pressure on landlords, while others were sold off due to state rent reforms that required properties to meet minimum standards.

Rental properties are few and each family home listed for rent can attract 50 to 60 applications, she said.

“It’s pretty scary, it’s pretty sad,” she said.

Renters could expect to pay anywhere from $380 to $480 a week for a basic home, or up to $650 for a larger apartment.

Tree changers from Melburnia are still coming, either for work or for retirement. Some have rented a house temporarily while they build an apartment for retirement, she said, adding to the demand.

KPMG Chief Economist Dr. Brendan Rynne said regional rent increases – which began in popular lake and tree change destinations early in the pandemic – have impacted more affordable markets across the state.

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“Lower income tenants in the rural and regional areas who have seen an influx [of demand from tree changers] have now been squeezed out of those markets because they can’t afford the higher rents,” Rynne said.

“They’re the ones who are now moving to more distant locations … who are now seeing rent increases.”

Rynne said regional demand has been exhausted and he believes prices are likely to plateau and later fall in some regions as there is a backslide into regional and metro cities.

Some tree changers might return to the city in a post-lockdown world, but this would be offset by a limited supply of new housing in many regional areas. Some landlords would pass on increased mortgage costs to tenants, he said.

Rynne added that the floods have further reduced the supply of housing, increasing competition and prices for remaining properties.

https://www.smh.com.au/property/news/pretty-scary-the-victorian-tree-change-towns-where-rents-rose-most-20230110-p5cbn2.html?ref=rss&utm_medium=rss&utm_source=rss_property Victorian regional rents rise after tree replacement boom, interest rates rise

Brian Lowry

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