MILDURA tenants are at risk of ongoing rent rises if “extremely tight” vacancy rates do not increase.
Mildura’s vacancy rate sits at 0.8 per cent, making it “one of the tightest parts of Victoria at the moment”, according to property insight company PropTrack.
Economist Angus Moore said the situation in Mildura and north-west Victoria, where the vacancy rate is 0.7 per cent, wasn’t great for renters.
“Conditions remain very tough in the north-west,” Mr Moore said.
“A vacancy rate of 0.7 per cent is extremely tight.”
In February 2020, the vacancy rate was higher at 1.07 per cent.
PropTrack last month revealed Victoria’s rental market was showing early signs of easing as vacancy rates recorded slight monthly growth.
However, in Mildura, rates have remained quite low, with the regional Victoria vacancy rate higher at 1.38 per cent.
The regional figure had increased by 0.44 percentage points over the past 12 months, whereas in the north-west, rates had increased by only 0.02 per cent.
Mr Moore said a lack of supply had affected the local vacancy rate.
“The reason we have such low vacancy rates in many parts of regional Victoria, but the north-west specifically, is that we have seen a lot of demand move there and the supply of rental properties hasn’t kept up with that,” he said.
“To solve that is to have more, and that means more investors buying properties and putting them on the market and ultimately building more homes for people who want to live in these popular regional areas.”
Mr Moore said rising interest rates had acted as a “headwind” for investor activity but investors were still eager to enter the market.
“(Interest-rate rises) have certainly raised financing costs pretty sharply over the past 12 months or so,” he said.
“But that being said, investors are making up a larger share of housing market activity than they were during 2020, in part because in 2020 it was very low.
“A lot of investors were selling out and very few new investors were coming in.
“That is starting to change now but rising interest rates are obviously a barrier for many.”
According to CoreLogic, the median weekly rental cost for a house in the Mildura area for April was $417.
This showed an increase of 2 per cent in the previous three months and 10.3 per cent in the previous 12.
Mr Moore said low vacancy rates were continuing to create a competitive environment for tenants, manifesting in rising rents.
“We have obviously seen rents in regional areas grow very quickly and we are seeing that across capital cities now as well.
“If we continue to see rental vacancy rates stay as low as they are in the north-west, we would expect to see ongoing rent increases, which is obviously going to put strain on many tenants.”
Sunraysia residents in NSW are likely to be faring better, with a vacancy rate of 2.2 per cent as of April 2023.
This showed an increase of 0.4 per cent in the previous 12 months.
