Melbourne faces 50,000 apartment shortage affecting rents,
The city is currently constructing half the number of new apartments compared to five years ago, and renters are feeling the effects.
Between 2016 and 2021, Melbourne experienced an apartment-building boom, with significant construction activity.
At the peak of supply around 2016, the Victorian capital was delivering an average of 12,265 new flats each year.
Now, just eight years later, the city is only producing 6,780 new apartments annually, marking a nearly 50 percent decline.
This drop in new supply has resulted in a shortage of rental listings, according to a report by Urbis.
The report was commissioned by the Urban Development Institute of Australia (UDIA) to assess build-to-rent housing trends.
“This scarcity in the rental market has caused the median weekly rent to rise by 4.8 percent over the past year,” the research firm stated.
Additionally, rents have increased by 16.4 percent on average over the last three years.
In comparison to other Australian cities, Melbourne’s 4.8 percent annual rental increase is relatively modest.
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Perth and Adelaide, for instance, have both experienced double-digit rental increases due to a surge in East Coast investor activity.
Nevertheless, rental conditions in Melbourne are impacting residents significantly, leading to challenges.
“Based on the existing pipeline and projected demand, Melbourne will face a deficit of about 52,800 apartments by 2029,” Urbis noted.
In addition to the stalled delivery of new apartments, the research firm has noted significant underdevelopment of existing strata blocks.
They identified 1,000 sites within a 15-kilometre radius of Melbourne’s CBD that could collectively provide over 100,000 new dwellings.
“Repositioning underdeveloped strata sites has the potential to significantly increase the supply of well-located housing,” stated Urbis director Mark Dawson.
Furthermore, he emphasized that with over 140,000 key workers employed within the City of Melbourne, more housing supply is essential.
Additional housing close to employment centers would provide critical relief for those who often need to live near their workplaces.
