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Tenants are being asked to fork out an extra $25 a week as Melbourne unit prices reach record highs, even outpacing the asking rent for a typical house.
The asking rent for Melbourne’s median unit hit $600 a week in the March quarter, Domain’s latest Rental Report, released on Thursday, shows, up from $575 three months earlier.
It is the first time on record that asking rents for units have been higher than for houses, which rose to $590 a week – $10 more than in the December quarter.
Domain chief of research and economics Dr Nicola Powell said a strong rebound in overseas migration and the return of university students had created more demand for units, driving up rents.
“It’s quite painful for tenants right now. Demand for units has returned much faster than supply can keep up,” she said.
Melbourne’s relative rental affordability to other major capital cities could be providing the capital with an “affordability edge”, Powell said. Melbourne has the lowest median house rent among Australia’s capital cities.
“When you compare Melbourne to Sydney or Brisbane, Melbourne stacks up much better financially while still offering high-quality, prestigious universities,” she said. “It’s a massive drawcard for international residents who specifically want to be in a major city like Sydney or Melbourne.”
Angie Zigomanis, head of data at Quantify Strategic Insights, said rental increases usually happened during the March quarter, following a December slowdown.
“[In December], you have international students that go back home, or even domestic students who finish their course and maybe go back to the country,” he said. “But then it picks up again in the March quarter because you get a whole new round of students.”
Zigomanis said an increase in migration since the September quarter 2025 had pushed up asking rents across both units and houses.
“At the moment, the demand side is pretty strong because we have solid population growth in Victoria,” he said. “We’ve got strong overseas migration, and we’ve also had interstate migration come back into positive numbers, which had been negative in the immediate post-COVID period.
“When people first come here, the first thing they’re going to do is look for something to rent rather than buy. And obviously, we haven’t ratcheted up what we’re building at the moment, so we’re going to be struggling on the supply side.”
For houses, Zigomanis said, the strong growth in rental bonds in Melbourne’s typically more affordable outer suburbs could explain why the median house rent was lower than the median unit rent.
Glenn Greenfield, a lifelong renter and founder of Renter Rated – a renter review platform highlighting negative and positive experiences – is looking for another home after a two-year VCAT battle with his landlord to remove a pest infestation.
The 47-year-old, who lives with his daughter in Pascoe Vale, said the stress of the past two years had made him want to move to a new place, and save some money.
But the market is dire: the quality of new builds is worse than the houses built 20 years ago, he said, and the photos used to advertise rentals are out-of-date sale photos. A recent tour of a modern three-storey townhouse required him to use his phone torch.
“When we got led by the estate agent, the downstairs was very dark, and I asked if we could switch the lights on, and she said there’s no power,” Greenfield said. “So we had to use our phone torches to conduct an inspection, and in the bathroom there were razor blades – like a shaving razor – on the floor. They just don’t care.”
Greenfield is looking further north to more affordable suburbs such as Craigieburn or Wollert, but said he needed to balance distance with cost-of-living and fuel prices.
“There’s no way to win unless you’re a double income or have a lot of housemates,” he said. “How does a relatively young person save to get into the buying market? It’s impossible.
Damien Patterson, director of policy, advocacy and engagement at Tenants Victoria, said higher rents for units than houses were “a real sign of dysfunction in the housing market”.
“Renters often look for units because they’re looking for cheaper housing options in the rental market,” he said. “But if units are now more expensive than houses, then there are few affordable options available for people who are looking for them.”
Patterson speaks daily to people struggling to buy food and pay for healthcare, and cutting social connections to make rent.
“Even ... when prices of many things are going up, the biggest part of most renters’ household budget is the cost of rent,” he said. “One of the most important things that we can do is take some measures to address the housing crisis.”
