Melbourne, a city long associated with laneways, lattes and lengthy leases, is now serving up a rare treat for renters—price drops. Yes, actual rent reductions. In a housing market that’s mostly been moving in one direction (up), there’s a change in mood across dozens of suburbs where weekly rents have slipped by as much as $100, even $200 in some places. For once, the relief isn’t just in the weather.
Ivanhoe East tops the chart for the biggest slide. Units there now go for $510 a week—down by over 12%. Caulfield, Parkville, and the leafy peninsula suburb of Sorrento have all joined the rent-slashing party, with house rents dropping between 7–9%. These are not outer fringe towns no one’s heard of; they’re blue-chip, high-demand postcodes. Which begs the question—what’s going on?
For tenants, it’s a welcome breather. For landlords, maybe not so much. Some are fuming, others are simply offloading properties or staying out of the game entirely. The Victorian government’s new rental protection laws—banning rental bidding, curbing no-fault evictions and tightening rules around increases—haven’t gone down well with everyone. A few property owners have called the reforms “just ridiculous,” seeing them as a reason to steer clear of the investment market altogether. And in a sluggish economy, that sentiment seems to be spreading.
Investor hesitancy aside, there’s also a change in how people rent. Households are splitting up less and doubling up more. Flatmates are back, family homes are getting fuller and the “move-out dream” has hit pause. Some renters are simply choosing to wait things out—or move back in with mum and dad.
There’s another twist to the tale. Melbourne’s attractiveness—the arts, the jobs, the beaches, the culture—hasn’t waned. Add cheaper rents to the mix, and interstate tenants are starting to look at the city with fresh interest. If Sydney’s rents are a boxing match, Melbourne feels like a yoga class by comparison. In some quarters, the city is now being called a “bargain” for out-of-staters, especially those arriving from the UK and New Zealand, who may be finding the current prices refreshingly tolerable.
But let’s not get carried away. While the drops are real, they’re not everywhere. A wide sweep of Melbourne still shows upward pressure. Rents for houses are currently sitting at $570 per week. That’s cheaper than Sydney, Brisbane, Perth and Darwin—but only just ahead of Hobart. For units, the median sits at $550 per week, making Melbourne more affordable than Sydney and Brisbane, but pricier than Adelaide and Hobart. In fact, since January 2020, Melbourne’s rental prices have climbed nearly 30%, far outpacing property value growth. That’s left plenty of renters still doing the maths, wondering how much longer their pay packet can stretch.
If you’re on the hunt for bargains, there’s a patchwork of affordability hiding in plain sight. Suburbs like Melton and Melton South offer houses for under $400 a week, while West Footscray and Kingsville are keeping unit rents around the $300–$330 mark—all within striking distance of the CBD. Gardenvale, just 10 km from the city, has a median unit rent of $295 a week—practically a unicorn.
These shifts haven’t changed the broader pressure cooker situation. Vacancy rates are scraping the bottom of the barrel, with the city hovering at just 0.7–0.8%. That figure means the next surge in rents might just be around the corner—especially if investors don’t re-enter the market and population growth continues.
The oddity of this moment lies in the contrast. Melbourne is somehow one of the tightest rental markets in the country and a place where some suburbs are seeing drops of $100 a week. It’s a riddle, but one that makes sense if you consider how supply and demand are playing hopscotch across different pockets of the city. Where investors have come back and stock has improved, rents have softened. Where stock remains scarce, the pressure is mounting.
All of this could change in a heartbeat. A new wave of migration, interest rate shifts, a government budget tweak, or even a rental exodus back to regional areas could tilt the see-saw again. But for now, if you’re a tenant in Melbourne—or looking to become one—there’s reason to smile. Just maybe not for too long.
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Melbourne rents drop in select suburbs (Ivanhoe East -12%, Sorrento -9%) as tenant demand shifts & investor hesitancy grows. Bargains exist but citywide vacancy remains tight. Interstaters eye affordable options amid broader #housingcrisis. #TheIndianSunhttps://t.co/G0FohGisqJ
— The Indian Sun (@The_Indian_Sun) March 27, 2025
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