Landlords in Victorian suburbs unable to raise rents

“It’s likely that these properties that were originally held as holiday homes are actually entering the rental market because the owners need to generate income,” he said.

Buxton Mornington Peninsula agent and auctioneer Clayton Smith said age He has seen an increase in holiday homes being rented out, resulting in supply in holiday destinations such as Sorrento outstripping demand for long-term rental properties.

“Land tax is part of it. You’ve got a small number of people who own homes here who wouldn’t rent them out in the past but are now trying to recoup some of the costs … there’s a bit of an oversupply of homes,” he said.

Mr Smith said rental prices in Sorrento were only now starting to return to normal after rising during the pandemic.

“I think it’s probably gone up more than some other suburbs so it’s slowed down a bit now. It’s probably because it went up a bit more and now it’s back to where it was.”

Mr Smith said while more permanent residents now called Sorrento home, workers and families were choosing to live in peninsula suburbs closer to Melbourne because of better job opportunities, hospitals and schools.

“If you look at Mornington, Mt Martha, Mt Eliza, you’re probably going to see an increase (in rents). Obviously those areas are more convenient for jobs and hospitals … proximity to employment is certainly a factor,” he said.

Suzi Gudasic, director of Buxton Highton Property Management, said rental prices in areas such as Vaughan Ponds had stabilised after landlords increased rents following a rent freeze during the pandemic.

“(Rents) are going up significantly across the board because there’s a shortage of housing and people are desperate to rent, and landlords can basically set whatever price they want,” Gudarcik said.

The average weekly rent in Waurn Ponds fell 1.9 per cent in the 12 months to June.

Mr Gudasik said while homes in Vaughan Ponds were being snapped up by renters, with prices slightly lower than neighbouring suburbs of Geelong and Hydon, there was an oversupply of student accommodation and it was slow to lease up.

“We don’t really have anything to rent other than rooming houses, and those are a little hard to sell at the moment. But if the price is right, the houses will sell very well.”

The Australia Institute senior economist Matt Grudnoff said the small number of suburbs where rents fell highlighted the lack of affordability in Melbourne’s rental market.

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Grudnov said while rents may have fallen in some regional towns, that doesn’t necessarily mean those towns offer affordable rentals.

Grudnov said rising rents were hurting young professionals particularly hard, with many choosing to share a home or move further out to find a rental that fits their budget.

“This is increasingly common across Australia as rents are rising. We also need to remember that the largest single contributor to the consumer price index (our main inflation measure) is the increase in rents over the past 12 months.”