Melbourne asking rents outpace inflation across about half of measured suburbs

Advertised rents have risen faster than inflation across about half of the Melbourne suburbs measured by REA Group, intensifying pressure on people entering a new lease or moving home.

Data reported by realestate.com.au late on Saturday showed house asking rents increased by at least 4.5 per cent in 207 of the 386 suburbs assessed. Melbourne’s annual inflation rate was 4 per cent in the September quarter.

For units, 136 of the 297 suburbs with a recorded median had asking-rent growth of at least 4 per cent. The analysis also found 116 suburbs where advertised rents had risen by at least $50 a week over the year.

The figures arrived as the Victorian Government introduced an online rent increase calculator. The Service Victoria tool converts rent between payment periods and allows renters to compare a proposed increase with the Melbourne Consumer Price Index.

However, renters and rental providers should not treat the CPI comparison as an automatic legal limit on increases.

Asking rents are not the same as every tenant’s increase

REA Group’s figures track advertised rents, which mainly reflect the prices sought when properties are placed on the market. They do not show that every established tenant received the same increase.

Existing renters may negotiate a smaller rise, while some homes will remain at their current rent until an increase is permitted and the required notice has been served. People moving home are more directly exposed to advertised prices because they must compete for currently available properties.

The largest percentage and dollar changes were concentrated in a mix of expensive inner and bayside suburbs, although increases were not confined to premium areas.

Middle Park’s median advertised house rent rose 29.3 per cent, or $268 a week, to $1,183. East Melbourne increased 26.8 per cent to $1,395, while Beaumaris rose 24.8 per cent to $1,310.

Those results can be influenced by the mix and relatively small number of properties advertised in an individual suburb. The broader finding — that rent growth exceeded inflation across a large share of Melbourne — is more useful than treating any one suburb’s annual change as a forecast.

What Victoria’s rent calculator can and cannot do

The Service Victoria calculator provides a quick comparison between a proposed rent rise and CPI. That can help renters understand the scale of an increase and prepare for a conversation with their rental provider or agent.

Consumer Affairs Victoria says CPI is only one of several considerations used when deciding whether an increase is excessive. Other factors include:

• rents for comparable properties in the same area
• the size of the proposed increase and earlier increases
• the property’s condition, location, land and facilities
• changes to the premises or services
• any relevant valuation or compliance action.

Victorian law does not set a general rule that private rent can rise only by CPI. An increase above inflation is therefore not automatically invalid, just as an increase below inflation is not automatically reasonable in every case.

Renters have a short window to challenge an increase

A rental provider generally must give at least 90 days’ notice before an increase takes effect and explain how it was calculated. In most Victorian private rental agreements, rent cannot be increased more than once every 12 months.

A renter who believes the new amount is above the market range can ask Consumer Affairs Victoria for a free rent assessment. The request must be made within 30 days of receiving the written increase notice.

Consumer Affairs Victoria will assess the market rental value and prepare a report. If the dispute continues, the renter can apply to Rental Dispute Resolution Victoria for a hearing within 30 days of receiving that report.

That makes it important to act when the notice arrives rather than waiting until the higher payment begins. Renters should keep the notice, their rental agreement, records of previous increases and examples of comparable properties.

Rental providers should also ensure notices use the correct form, allow the full notice period and clearly state the calculation method. Failure to follow the process may make an increase invalid, regardless of the amount sought.

What it means for you

• Advertised-rent data mainly describes new leases, not every existing tenancy.
• Use the calculator as a starting point; CPI is not a universal cap on Victorian rents.
• Renters have 30 days after receiving an increase notice to request a free assessment.
• Rental providers should check timing, frequency, calculation and notice requirements before raising rent.