Melbourne’s Rental Crisis: Why 2026 Rents May Climb Again

The Melbourne rental crisis isn’t just a headline—it’s something I encounter daily, working directly with families navigating its tough realities. Over the past few years, I’ve witnessed Melbourne’s rental market spiral, with rents soaring to unprecedented highs and vacancy rates plummeting. Helping countless families move, I’ve seen firsthand how this crisis, combined with the rising cost of living in Melbourne, is reshaping our city, pushing renters to make tough, sometimes heartbreaking choices about where and how they live.

Back when international borders closed due to COVID, inner-city apartments stood empty, and rents momentarily dropped. But that respite was short-lived. As borders reopened, demand surged again, bringing rents back with a vengeance. Melbourne’s rental affordability is now worse than ever, and families who once comfortably lived in vibrant communities like Brunswick or Carlton are finding themselves priced out, forced to relocate to outer suburbs for financial relief. Even then, many families try to choose the safest suburbs in Melbourne to ensure their new community feels secure as well as affordable.

This isn’t merely a market fluctuation—it’s a fundamental shift in how we live and plan our futures. Even middle-class earners are feeling the pinch, dedicating nearly a third of their incomes to housing. As the owner of North Removals, I’ve seen the emotional and financial toll of this crisis on my clients, emphasising the urgent need for lasting solutions to make Melbourne rental costs manageable once again.

Melbourne’s Current Rental Market

Melbourne’s rental crisis, part of Australia’s broader housing issue, features record-high rents and tight vacancy rates. As at the week ending 20 December 2025, asking rents in Melbourne averaged about $651 per week across houses and units (around $774 for houses and $563 for units), and rental affordability has stabilised only after a sharp decline in recent years. Rental costs are now comparable with Adelaide and still sit below Sydney. Meanwhile, Melbourne’s vacancy rate was 2.0% in November 2025, below the balanced market threshold of roughly 3%, meaning most rentals are snapped up quickly.

Recently, I assisted a family move from Brunswick after their rent increased by 15%, illustrating how rental affordability in Melbourne has deteriorated sharply. With median rents now chewing up about a quarter of the typical renting household’s income, renters face mounting pressure and tough relocation decisions.

Figures on Melbourne’s Rental Crisis

I’ve seen the Melbourne rental crisis escalate firsthand in my work as a removalist. It’s part of the broader rental crisis gripping Australia, with rent in Melbourne surging and vacancy rates seeing-sawing over the past five years. Below are some key figures that tell this story in Melbourne’s rental market, 2019–2025.

A dual-line chart illustrating Melbourne’s rental vacancy rate (orange, % left axis) and median weekly rent (blue, $ right axis) from 2019 to 2025. Vacancy spiked to ~5% in 2020 (amid COVID border closures), then fell under 2% through 2021–2023, before edging back up to ~1.9% in late 2024 and sitting at 2.0% in November 2025. Rents dipped in 2020 and then climbed ~39% from early 2021 to late 2023, before growth moderated to ~4% in 2024. Through 2025, rent growth remained more subdued, with Melbourne’s combined weekly asking rent around $651 by the week ending 20 December 2025. As shown above, Melbourne’s median advertised rent soared by about 39% between March 2021 and December 2023. This rent boom then slowed sharply in 2024, with median rents rising only around 4% from December 2023 to December 2024. Meanwhile, vacancy rates have eased slightly: after plunging below 2% during 2021–2023, Melbourne’s rental vacancy rate increased from roughly 1.2% to 1.9% through 2024, and held at 2.0% in November 2025.

For context, during the 2020 pandemic, the vacancy rate spiked to about 4–5% as international students and migrants left the city — a stark contrast to the sub-2% tight market of 2022–23. Since then, conditions have eased slightly: Melbourne’s rental vacancy rate lifted to 2.0% in November 2025 (up from 1.8% the month before), suggesting a small but welcome increase in supply, even if rental costs for tenants are still near record highs.

From my perspective, these numbers aren’t just stats – they reflect real families’ lives. Stories like theirs have become all too common. Even with a slight easing now, rental affordability in Melbourne is at its worst in over a decade. Until we address the housing shortage in Melbourne and boost affordable housing, many renters will continue to be pushed to the fringe of the city in search of relief. It’s a tough situation and because of that reason I created my guide, best suburbs in Melbourne, where renters can find affordable and same suburbs for their families.

Geographic Distribution of Melbourne’s Rental Crisis

As someone who helps families and renters navigate Melbourne’s property landscape every day, I’ve witnessed first-hand how the Melbourne rental crisis is reshaping every corner of our city. This crisis doesn’t discriminate — it’s not just hitting trendy inner-city apartments or high-demand suburbs like Richmond or Fitzroy; it’s spread city-wide, even to places once thought of as affordable havens. Over the year to June quarter 2025, Melbourne’s Metropolitan Rent Index rose 2.5 per cent, with rents remaining near record highs. However, certain suburbs have blown past that broader pace, showing double-digit price hikes in previously affordable outer areas.

Areas like Dandenong, on the south-eastern fringe, have surged dramatically, seeing an annual rent increase of about 16 per cent. Meanwhile, Broadmeadows in Melbourne’s north isn’t far behind, with rents climbing around 14 per cent annually. Even Werribee, in the south-western suburbs, saw rents spike 13 per cent, placing significant strain on renters who thought they’d found a budget-friendly alternative. Just recently, my team helped a young family relocate from Carlton to Dandenong, chasing affordability. However, what was once a pocket-friendly move turned stressful when they realised rents in Dandenong had already soared.

The ripple effect is clear — Melbourne’s outer-ring suburbs are facing unprecedented rental pressures, largely driven by people being priced out of the inner-city and middle-ring areas and pushed further out. CoreLogic data is often cited as highlighting this shift: outer municipalities like Greater Dandenong, Hume (Broadmeadows), and Wyndham (Werribee) have led rental growth at times, even if their absolute rents (for example, $520 per week for Dandenong and $480 per week for Broadmeadows and Werribee) remain below metro benchmarks. For context, metropolitan Melbourne’s median weekly rent was $570 in the June quarter 2025, and Domain reported Melbourne’s median house rent holding at $580 per week in the September quarter 2025.

Back in 2020, Melbourne’s CBD and inner suburbs emptied as international students and workers left, pushing the rental vacancy rate to around 4–5% and causing rents to fall temporarily. But since borders reopened, these inner-city areas have quickly refilled, pushing rents back up. Yet, more recently, conditions have stabilised: by the September quarter 2025, Melbourne house rents were flat year-on-year (with unit rents up 4.5%), and Melbourne’s vacancy rate sat at 2.0% in November 2025 — pointing to smaller, low single-digit rent increases rather than another surge.

Rent vs Income in Melbourne

One of the biggest shifts I’ve seen over the past five years is how the Melbourne rental crisis has slowly erased the cost advantage we once had over cities like Sydney. Back in 2019 and early 2020, Melbourne renters were in a better position, paying less for housing and spending a smaller share of their income on rent. It wasn’t perfect, but it was manageable for many. Fast forward to September 2025, and that gap has narrowed. Renting the median dwelling in Melbourne was costing the typical household about 28.1% of gross income (around 29.2% for houses and 26.9% for units) — only a step behind Sydney, where renting the median dwelling was taking about 33.7% (around 35.2% for houses and 31.5% for units).

Just last month, I helped a couple with two kids move from Glen Iris to Werribee. They loved their old place, but the rent jumped nearly $180 a week on renewal—staying wasn’t an option. Thankfully, they booked their move on our Way Cheaper Wednesdays, scoring a handy 15 % discount that made the relocation a little easier on their budget.

Below is a snapshot of how Melbourne’s rental figures compare with other capitals. It puts into perspective how far we’ve come—and how close we now sit to the national affordability tipping point:

City	Median Weekly Rent (2020)	Median Weekly Rent (2026)	% Increase	Rent-to-Income Ratio (2020)	Rent-to-Income Ratio (2026)
Melbourne	$440	$580	+32%	~23–26%	28.1%
Sydney	$540	$780	+44%	~28%	33.7%
Adelaide	$405	$620	+53%	~20–22%	35.5%
Perth	$395	$700	+77%	~20%	34.0%
Australia (avg)	~$430	$671	+33–35%	~27%	33.4%

Melbourne’s rents have risen sharply—up 32% since March 2020, based on the latest available data—but what’s even more striking is how quickly the gap has narrowed with cities like Sydney and Perth in terms of rent burden. Back in 2020, Melbourne renters were spending around 23–26% of their income on housing. Based on the latest available data to September 2025, it’s now about 28%, nudging us closer to the 30% line and the edge of rental stress. Perth and Adelaide, once affordable, are now sitting at around 34% and 35.5% of income respectively, while the national average is 33.4%. In short, the days of Melbourne being the “cheaper capital” are well behind us. Affordability pressures are hitting renters hard across the board, and Melbourne is no exception.

Keep in mind, once you pass the 30% mark, most experts consider that rental stress, meaning you’re spending too much of your pay just to keep a roof over your head. When even traditionally affordable places like Adelaide and Perth are approaching—or clearly passing—that threshold, you know it’s a national problem. But here in Melbourne, I’ve watched the squeeze play out one move at a time—tenants downsizing (sometimes even turning to self-storage despite the Melbourne storage costs involved), moving further out, or splitting houses to stay afloat. What used to be a choice is now a necessity.

This widening pressure on rental affordability Melbourne-wide is changing the way we live and plan. And if we don’t start tackling supply and affordability now, the next generation of renters will face even tougher decisions.

Causes Behind Melbourne’s Rental Crisis

Pandemic Effect and Rebound

The Melbourne rental crisis was exacerbated by the city’s unique pandemic rollercoaster. During Melbourne’s prolonged COVID-19 lockdowns in 2020–21, thousands of residents left the city, temporarily easing demand. Melbourne’s population fell by over 60,000 in the year to September 2021 — a startling exodus that hit inner-city rentals hardest. With international students gone and many young people moving back home, rent in Melbourne’s CBD apartments plummeted; in some areas, asking rents dropped almost 30% in 2020. I remember that period well: my removal business moved plenty of people out of tiny city flats to larger suburban or regional homes, as working from home and strict lockdowns made inner-city living less attractive.

Since borders reopened in 2022, Melbourne has experienced a sharp increase in rental demand due to the return of international students, migrants, and locals. Net overseas migration surged to a record 538,000 in 2022–23, stayed elevated at 429,000 in 2023–24, and then eased to 306,000 in 2024–25 (based on the latest data) — with the biggest pressures concentrated in Sydney and Melbourne. Consequently, Melbourne’s rental market shifted rapidly from surplus to shortage, causing vacancy rates to fall to around 1% by early 2023. Housing supply lagged significantly behind, intensifying competition and driving rental prices sharply upward.

This heightened competition resulted in Melbourne rents surging approximately 9–10% in 2022 alone, marking the city’s fastest rental growth on record. The Rental Affordability Index has tracked affordability sliding hard through the early 2020s — with Melbourne down about 22% between 2021 and 2024, before stabilising in 2025 (based on the latest data). Anecdotally, families like one in Northcote faced rent increases of 20% and intense bidding wars, underscoring the severe impact of the housing shortage. Such stories illustrate the dramatic and challenging rebound Melbourne’s rental market has experienced since pandemic lockdowns ended.

This pandemic whiplash — from mass departures to a sudden influx — is a major reason renters are now struggling. It’s a vivid example of how quickly rental costs in Melbourne can skyrocket when demand races past supply, setting the stage for other factors now fuelling the crisis in our city.

Pandemic effect on Melbourne rental market (2020–2026)

Period	Population change	Rental market impact	Vacancy rate	Rent change
Lockdowns (2020–21)	Fell by 60,000 residents	Demand eased; inner-city rentals hit hardest	Higher (especially inner-city)	Inner-Melbourne unit rents fell 22.4% (year to March 2021)
Post-lockdown rebound (2022–26)	Up by 167,484 residents in 2022–23 and 142,637 in 2023–26	Record migration surge; intense competition for rentals	1.1% (Feb 2023), rising to 2.0% by Nov 2025 (latest data)	Up 9.8% (12 months to Dec 2022); up 3.5% year-on-year by Nov 2025 (latest data)

Reduced New Housing Construction

One major driver behind the Melbourne rental crisis is the slow pace of new housing construction over the past few years. During COVID, Victoria saw a temporary boom in building approvals, especially in 2021 when federal incentives like HomeBuilder pushed approvals to record highs. That year, more than 70,000 dwellings were approved across Victoria, including a massive 48,000 detached houses—a record. But after that peak, things fell off quickly. Rising interest rates, labour shortages, and cost blowouts sent the market into retreat. By late 2023, dwelling approvals in Victoria had dropped back to around 53,000, and apartment approvals in particular had fallen by over 40% compared to pre-pandemic levels.

This dip matters because those 2021 approvals are still being built. In 2024, Victoria led the country in housing completions, delivering about 60,400 new homes. But with fewer new approvals coming through the pipeline, future supply is already looking tight again. And with the Australian Government aiming to build 1.2 million new, well-located homes nationally over five years, Victoria needs to deliver around 45,000 a year just to stay on track. Right now, it’s close—but not consistently over the line—and unless approvals lift soon, we’ll fall behind just as population growth returns.

In the meantime, demand’s gone through the roof. Since 2022, Melbourne’s seen a big influx of international students, migrants, and young renters returning to the city. But the supply hasn’t kept up, especially in the apartment sector, which is where most renters live. When my team helped a couple relocate from Southbank to Reservoir in 2026, they told me they’d been outbid on five apartments in a row. Not because they weren’t organised, but because there just weren’t enough places on the market. Vacancy rates in Melbourne have remained below what most experts consider “balanced”: for example, they sat at about 1.5% in March 2025 and 2.0% in November 2025 (based on the latest available data), when a balanced rental market is closer to 3%. That mismatch is driving up rental costs in Melbourne and putting massive pressure on anyone trying to find affordable housing in Melbourne today.

This graph highlights how Victoria’s housing approvals have shifted dramatically since 2018, with detached house approvals surging to a peak of about 47,500 in 2021 — driven by pandemic incentives like HomeBuilder — while unit and apartment-style approvals fell away sharply, dropping to around 18,900 in 2023. Even with a modest lift in the apartment pipeline to about 20,100 in 2024, and around 21,900 approvals for dwellings other than houses over the 12 months to October 2025 (based on the latest available data), the multi-unit sector has still struggled to recover to pre-pandemic levels. Looking ahead to 2026, the numbers point to only a gradual turning point: the Housing Industry Association’s latest forecasts suggest multi-unit commencements are expected to start lifting again from 2026, with national multi-unit starts forecast to rise 6.5% to about 76,570 — a recovery, but one that begins from a low base.

With demand rising and fewer new apartments in the pipeline, rental costs in Melbourne for 2026 remain under pressure, and affordability continues to worsen. Until we see a stronger pipeline of new homes—especially medium- and high-density builds—this housing shortage in Melbourne isn’t going anywhere. And for renters, that means tighter competition, higher prices, and fewer choices.

Policies and Investment

I’ve seen firsthand that the Melbourne rental crisis isn’t just a quirk of the market — it’s also shaped by the policies we set and where investment flows. For instance, many investors sold off properties during and after the pandemic, shrinking the Melbourne rental market.  In the federal electorate of Melbourne, there’s an estimated shortfall of around 6,000 social housing homes for households who need them, highlighting a long-running housing gap.

Victoria also introduced tenant-focused reforms — including limiting rent increases to once every 12 months and bringing in minimum standards for rental properties — with major changes commencing in March 2021. While these changes improved fairness and housing conditions, they didn’t prevent rents from rising when demand outstripped supply. Vacancy rates nationally remain tight, and while Melbourne’s vacancy rate has lifted compared with the worst of the crunch, it still sits well below what many analysts call comfortable. By late 2025, Melbourne’s combined advertised rents were averaging around $650 a week (with houses higher and units lower), which is still a heavy hit for many households trying to keep pace.

Melbourne rental policy timeline and market impacts (2019–2025)

Year	Policy/Event	Market Impact
2019	Tenant-friendly reforms introduced	Rent hikes limited, minimum standards enforced
2024	Rental affordability hits its worst level since 2011	24,000 rentals lost; increased competition
2024	Inner-city affordable housing shortfall	6,000 dwellings gap; intensifying shortage
2024	Rental affordability hits worst level since 2011	Landlord sells off due to taxes/regulations
2025	Rent growth eases but the market remains tight	Metro Melbourne median rent $570/week; vacancy rate 2.4%

Internal Migration

The Melbourne rental crisis hasn’t just been driven by local demand — it’s also been shaped by a strong wave of internal migration into the city. As Sydney rents and living costs shot up over the past few years, thousands of people started eyeing Melbourne as a more affordable alternative. And the numbers back it up: based on the latest data in the September quarter 2025, Melbourne’s median house rent sat around $580 per week, compared with $780 in Sydney — a difference of roughly $10,400 a year. That affordability gap has kept Melbourne on the radar for people priced out of Sydney.

But it’s not just about people leaving Sydney. Based on the latest ABS data to 30 June 2025, New South Wales recorded a net interstate loss of around 24,300 people, while Victoria’s interstate balance was close to flat (a net loss of about 800). And while a lot of that movement has gone north and west, Melbourne still catches a share — especially for those who want big-city jobs without Sydney’s price tag.

There’s also the constant churn within Victoria itself. People from regional areas — like Ballarat, Shepparton and Gippsland — do relocate to Melbourne for better job opportunities, healthcare, education and public transport. I’ve personally helped several families move from Warragul and Echuca into outer suburbs like Craigieburn and Tarneit. They weren’t chasing luxury — they were trying to find affordable housing in Melbourne that still connected them to essential services. At the same time, the latest ABS regional population figures show Greater Melbourne still had net internal migration out overall, meaning more people moved from Melbourne to regional Victoria than the other way around — so it’s not a one-way street.

Add to this the return of international students, many of whom arrive via Sydney but settle in Melbourne for its education hubs and (relatively) more competitive rental market. Combined, these flows have put serious pressure on the Melbourne rental market, especially in city-fringe suburbs that used to be accessible for first-time renters. Vacancy rates across Melbourne have stayed below the 3% threshold considered “balanced” — with the latest data putting metropolitan Melbourne at around 2.4% in November 2025 — and rent in Melbourne has risen over 30% since 2020. It’s no wonder we’re seeing higher rental costs, tighter competition, and a growing housing shortage in Melbourne. If these migration trends continue — and it looks like they will — Melbourne’s rental affordability will only get tougher for locals and newcomers alike.

This chart shows how internal migration is reshaping the population map — and, in turn, rental demand. Based on the latest available ABS data (year to 30 June 2025), New South Wales recorded a net interstate loss of about 24,300 residents, while Victoria was close to flat overall (a net loss of around 800). Even with Victoria’s interstate balance tightening, the broader pattern still matters for Melbourne: when people compare Sydney vs Melbourne and choose the “cheaper big city”, that extra churn lands in the same suburbs already feeling the squeeze. If you’re weighing Sydney vs Melbourne, see our city alternatives compared. The shift in population is reshaping rental demand at a state level, adding to the urgency of addressing housing availability in metropolitan Melbourne.

Consequences for Melbourne Tenants

Young Professionals and Students

The Melbourne rental crisis has severely impacted young people, particularly students. When international students returned in 2023, they faced intense competition in a market already running hot. Affordable accommodation near campuses became scarce, with only around 6% of students able to access purpose-built student accommodation. Many students resorted to overcrowded share houses or makeshift living arrangements.  If you’re budgeting, try to avoid premium renting hotspots and widen your search radius to more affordable suburbs.

Even now, rents remain elevated, though growth has eased compared with the peak surge years: based on the latest available data to the end of 2025, metropolitan Melbourne’s median weekly rent was $570 in the June quarter of 2025, and the rent index was up 2.5% over the year. Consequently, many renters are now dedicating close to one-third of their income to keeping a lease, the highest proportion in decades. Recently, my team at North Removals helped new graduates move from a small Fitzroy apartment to a larger suburban home with our man with a van service, planning to share rent among four roommates instead of two. Such scenarios highlight how Melbourne’s unaffordable rental market is dramatically reshaping living arrangements for a generation.

Families and Local Workers

The Melbourne rental crisis isn’t just squeezing the most vulnerable – even middle-class families and local workers are feeling the strain. Housing advocates note that Australians on six-figure salaries are now struggling with rental stress, with one report finding a single person needs at least $130,000 a year to comfortably afford a typical unit rent. In Melbourne, based on the latest available data to the end of 2025, the median renting household is now spending around a quarter of its income on rent (about 25%) – up from about 23% in 2019. This rapid jump in rental costs outpacing incomes means many working families are officially in “moderate” stress, and I’ve seen firsthand how they’ve had to make tough choices to cope. If you’re moving to Melbourne with kids, start with our family moving to Melbourne guide for checklists, schools, and setup steps.

The Melbourne rental crisis has significantly impacted essential workers, including teachers, nurses, and hospitality staff, forcing them to live farther from their workplaces. Around 5% of Victorian households are experiencing severe rental stress, driving increased demand for assistance from charities and community organisations. Tenants Victoria, overwhelmed by requests, reports that only 29% of calls to the state’s tenant support line were answered in October 2025, highlighting just how hard it’s become for renters to access help when things go wrong. The crisis affects entire communities, with families and tradespeople relocating or moving in with relatives, highlighting the widespread societal strain.

How Melbourne families respond to rising rents

Coping Strategy	Example or Impact
Moving to outer suburbs	Northcote family moved to Melton, saving $200/week
Longer daily commutes	Commuting from places like Campbellfield (about 13 km from the CBD) or Melton (about 37 km from the CBD)
Downsizing or choosing older homes	Accepting below-ideal housing standards
Sharing housing	Families moving in with relatives to reduce costs

Local Stories

The Melbourne rental crisis is directly impacting local families, exemplified by one family in South Melbourne forced out when their landlord sold the home. Despite months of searching, intense competition at inspections and a nearly 20% increase in weekly rents severely limited their options. Ultimately, they had to move almost 50 km away to find affordable housing. Their experience highlights the immense pressure and difficulty ordinary families face in Melbourne’s current rental market.

I see these trends first-hand. When my team helped that South Melbourne family pack up for their move, they told us it felt like the city had left them behind. I’ve heard similar stories from many clients – good tenants priced out and pushed further from their communities because of the broader housing shortage Melbourne is facing. Each local story like this is a human reminder that behind the statistics are real people making tough choices. It’s something I keep in mind as we look at ways to navigate and alleviate this crisis in the sections ahead.

Key statistics on Melbourne’s rental crisis (2025)

Statistic	Value
Victorian households facing rent increase	58%
Vacancy rate (Greater Melbourne)	Around 2.0%
Recent rental increase compared to pre-pandemic	More than double
Distance family moved due to affordability	Almost 50 km from city centre
Typical rent increase faced by families	Nearly 20%

Recent Signs of Relief

After a grim period in the Melbourne rental crisis, we finally saw a few rays of hope late in 2024 — and, based on the latest data to the end of 2025, that easing has (slowly) carried into 2025. Unlike Sydney’s still-heated market, Melbourne saw vacancy rates lift from about 1.7% in October 2024 to 2.0% in November 2024, and they were still sitting at 2.0% in November 2025 — not “normal” by any stretch, but a clear improvement on the ultra-tight conditions that fuelled the worst of the squeeze. At the same time, the official CPI measure showed rent growth cooling: in the December quarter 2024, rents in Melbourne rose 0.6% (the smallest quarterly rise since the March quarter 2022), and by the September quarter 2025 annual rent inflation in Melbourne had eased to 3.7%.

What is Victoria Doing to Address the Rental Crisis?

Government Housing Plans

As the Melbourne rental crisis continues to bite, I often get asked what the Victorian government is doing about it. One major response has been Victoria’s Big Housing Build – a $5.3 billion plan launched in 2020 to deliver 12,000 new social and affordable homes within four years. Billed as the state’s largest-ever housing investment, this initiative promised roughly 9,300 new social housing units and 2,900 affordable homes.

Fast forward to today, and the results are mixed. Based on the latest available data, more than 10,100 homes were reported as complete or underway under the Big Housing Build and Regional Housing Fund by early 2025, and government reporting at the time put the number of households already moved into new homes at nearly 5,000. That’s real progress, but it hasn’t yet turned the tide: Victoria’s social housing stock was reported to have grown to about 89,500 dwellings by mid-2024 (up about 4,400 since 2020), and the social housing waitlist still stretches into the tens of thousands — with 56,234 new Victorian Housing Register applications recorded as at June 2025, plus 10,647 transfer applications.

I see the human side of this every day. When my team helped move a family in Brighton into a community housing unit after months of couch surfing, the relief on their faces was unforgettable. It showed me the impact that the affordable housing Melbourne desperately needs can have on people’s lives. Building more homes is only part of the solution – even with these efforts, the housing shortage Melbourne faces continues to leave many renters in limbo, waiting for real relief.

Key housing affordability trends in Melbourne (2020–2025)

Indicator	Situation by 2025
Social housing waitlist	Tens of thousands of people (56,234 new applications, plus 10,647 transfer applications as at June 2025)
Change in rental affordability (RAI score)	Fell by 6% (worst in over a decade)
Median weekly rent	About $570 per week
Social housing stock growth since 2020	Around 4,400 additional dwellings

Rental Market Incentives

To address Melbourne’s rental crisis, the Victorian government has introduced tax incentives to increase housing supply, particularly through build-to-rent projects — long-term rental apartment developments. Incentives include stamp duty relief for eligible off-the-plan apartments, units and townhouses (now extended to October 2026), alongside build-to-rent land tax settings such as a 50% land tax discount (and an exemption from the absentee owner surcharge) for eligible developments. Some projects, like the Victoria Gardens Precinct in Richmond — delivering more than 820 new homes with 10% set aside as affordable housing — are designed to gradually improve Melbourne’s rental affordability.

Nevertheless, the momentum is encouraging. Housing advocates widely agree that increasing supply is crucial for resolving our rental crisis. These tax-incentivised projects should progressively ease Melbourne’s housing shortage by introducing modern, tenant-focused homes. I’m optimistic that, as these apartments become available, more families will find affordable places to live, gradually slowing the rapid rise of Melbourne rents. It’s a long-term strategy, but one likely to ease rental pressures significantly over time. If you are moving within Victoria soon, please check my change of address checklist now.

Key Victorian government incentives for build-to-rent projects

Incentive	Description
Stamp Duty Reduction	Slashed stamp duty on eligible off-the-plan apartments, units and townhouses (now extended to October 2026).
Land Tax Discount	50% discount on land tax for eligible build-to-rent developments (available for up to 30 years).
Affordable Housing Inclusion	Some projects dedicate units as affordable (e.g. 10% of the Richmond project’s 820+ homes).

Tenant Support

As the Melbourne rental crisis drags on, renters are feeling the squeeze from every angle. Rents have skyrocketed — based on the latest available data, Melbourne’s median weekly rent is sitting at a record high of about $580 for houses and $575 for units (with unit rents up from roughly $550 a year earlier).At the same time, the housing shortage Melbourne faces is reflected in a vacancy rate holding around 2.0% in November 2025 (based on the latest available data) — still well below the ~3% level most analysts see as “balanced”.  It’s no wonder rental affordability in Melbourne has deteriorated to its worst level in years, with the Rental Affordability Index for Greater Melbourne down around 6% in the year to 2024 — and the latest 2025 release suggesting the decline has largely stabilised, even if we’re still stuck near record lows.

Several support programs help Melbourne renters facing affordability issues. The Commonwealth Rent Assistance (CRA) subsidy increased maximum rates by 15% in September 2023, then increased again by 10% in September 2024 (on top of regular indexation), providing added relief for eligible low-income tenants. Victoria offers RentAssist, an interest-free loan for rental bonds. Additionally, community organisations and charities offer emergency rental payments and financial counselling. Tenants Victoria provides free legal advice and support for disputes and evictions, complemented by grassroots groups like Renters and Housing Union (RAHU) advocating tenant rights. Consumer Affairs Victoria also investigates excessive rent increases, handling 7,469 excessive rent applications in 2023–24 (up from 5,448 the year before).

To make it easier for readers, I’ve compiled a brief overview of key support options for tenants:

Support Option	Description
Commonwealth Rent Assistance (CRA)	Ongoing federal payment for eligible low-income renters to help cover rent. The maximum rate was boosted 15% in September 2023, then increased again by 10% in September 2024 (on top of regular indexation) to provide extra relief.
RentAssist bond loans (Victoria)	Interest-free government loans for rental bonds, helping renters who can’t afford the upfront bond to secure a home.
Tenants Victoria (independent NGO)	Free legal advice and assistance for Victorian renters. Offers a phone advice line and helps with issues like evictions, repairs and bond disputes.
Renters And Housing Union (RAHU)	Grassroots union of renters that advocates for tenants’ rights. Organises renters to collectively negotiate with landlords and provides peer support and advice.
Consumer Affairs Victoria (CAV)	Government body that enforces rental laws. Can review proposed rent increases (and order reductions if an increase is beyond market rates) and provides information on renter rights (free of charge).

Support systems significantly help renters during Melbourne’s rental crisis. When assisting a family moving out of Kew after facing a nearly 20% rent increase, we saw firsthand the anxiety it caused. However, after referring them to Tenants Victoria, they received valuable legal guidance, successfully negotiating a move-out extension and partial bond refund. Many clients have similarly benefited from timely advice, highlighting the critical role expert support plays in reducing stress and financial burdens during challenging relocations.

Policymakers in Victoria are increasingly responding to renters’ needs, with measures like ending ‘no reason’ (no-fault) evictions — reforms that were legislated in 2025 and began rolling out from 25 November 2025. Discussions also continue about capping rent increases in line with inflation, similar to the ACT’s approach, where increases are generally limited to no more than 10% above the growth in the rents component of the CPI. The limited reach of Victoria’s current rental provider register — essentially a public non-compliance register, rather than a comprehensive licensing scheme — has also fuelled calls for stronger regulation. These reforms aim to ensure greater fairness and stability for everyone who is relocating to regional Victoria.

Federal and State Collaboration

The Melbourne rental crisis has grown beyond what Victoria can tackle alone. Addressing it requires close federal–state collaboration, since key levers – immigration, economic policy, and funding for housing – are controlled nationally. Based on the latest available data to the end of 2025, Australia’s population grew by 1.5% in the year to 30 June 2025, with net overseas migration of 305,600 people – still a major driver of rental demand, even as the post-pandemic surge has started to cool.

The federal government’s role is especially vital in boosting housing supply and affordability. Victoria is counting on national schemes like the Housing Australia Future Fund – a $10 billion initiative designed to support the delivery of 20,000 new social homes and 20,000 new affordable homes across Australia over five years. Homes funded today won’t be move-in ready tomorrow, and in the meantime, vacancy rates remain tight. Even as rent growth shows clearer signs of cooling – with Melbourne’s vacancy rate holding at 2.0% in November 2025 and advertised rents up 3.5% year on year (based on the latest available data) – tenants are still facing a housing shortage Melbourne-wide.

When my team helped a family relocate from Melbourne to Geelong after their rent jumped sharply, I saw firsthand how policy debates translate into real-world stress. They asked me if any relief was coming. I told them about the new federal housing funds and Victoria’s social housing projects, but we all understood these solutions won’t kick in overnight. The encouraging news is that all levels of government are finally pulling in the same direction to tackle the Melbourne rental market’s challenges. The key now is bridging the gap until those longer-term measures take effect – something we’ll explore next.

Affordable, Reliable Moves During Melbourne’s Housing Shortage with North Removals

Melbourne’s rental affordability crisis highlights critical issues: rapidly rising rents, inadequate housing supply, and immense pressure on families and workers city-wide. While recent policies and developments offer hope—like Victoria’s Big Housing Build and build-to-rent incentives—these solutions will take time to truly ease the housing shortage Melbourne faces. Immediate relief remains crucial for renters caught in the crossfire. Target inspections smartly—use this growth-area short-list to focus your applications.

I recall clearly helping a young family relocate from Melbourne to Ballarat after their landlord increased rent by 15% overnight. They loved their neighbourhood—its schools, cafes, and sense of community—but staying wasn’t financially feasible. The emotional toll was evident, underscoring the real-life impact behind every statistic. Stories like theirs remind me that beyond policy debates, people urgently need tangible support and affordable options.

If you’re facing the stress and uncertainty of Melbourne’s rental market, remember you’re not alone. At North Removals, we’ve built our reputation as the best removalist in Melbourne by committing not only to helping you move but also to easing your transition during these challenging times. With more than 700 five-star reviews backing our service, you can trust us to handle every detail of your move. Reach out today and let’s get you settled with confidence.