Unit rents in inner Melbourne are now at 2010 levels, tumbling by $110 a week according to Domain's rental report for the March 2021 quarter.
Compared with this time last year, unit rents have plunged by 12.8% while vacant rentals remain 182% higher than last year at 4.4% as the impacts of COVID continue to be felt.
"The bounce in estimated vacant rentals is directly related to reduction in demand as a result of international border closures that have curtailed overseas migration and foreign student numbers, as well as more tenants becoming homeowners and remote working resulting in an exodus of city residents to lifestyle locations," said Domain Senior Research Analyst, Dr Nicola Powell.
"A stark turnaround in net interstate migration slipping into negative territory for the first time since 2008 has also weakened demand."
For the first time on record, Melbourne is now the second most affordable capital city to rent a house in, and the third most affordable to rent a unit in.
"Tightening rental conditions in Adelaide and Perth could push rents higher than Melbourne in the coming months, which would make Melbourne the most affordable city to rent.”
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Capital city rent prices in March 2021 quarter
| City | Unit median rent | House median rent |
| Sydney | $470 | $550 |
| Melbourne | $375 | $430 |
| Brisbane | $400 | $440 |
| Adelaide | $350 | $425 |
| Perth | $365 | $430 |
| Hobart | $420 | $480 |
| Canberra | $500 | $600 |
| Darwin | $430 | $550 |
| National | $429 | $471 |
Source: Domain Q1 2021 Rent Report
House rents in most capital cities hit record highs
According to the report, house rents in all capital cities except Melbourne, Perth and Darwin hit record highs in the March 2021 quarter.
Brisbane rents are at record highs with houses up $15 a week over the March 2021 quarter. House rents in Brisbane are now at $440 a week - a 7.3% ($30) increase from one year ago.
"This is the steepest annual increase in house rents since 2008 following three strong consecutive quarters of rent gains," Dr Powell said.
"For the first time in five years, it is now more expensive to rent a house and unit in Brisbane than Melbourne.”
Dr Powell said renters will continue to struggle to find a place to live, as Brisbane's vacancy rate declines to 1.5%.
"Tenants will find less choice, with the pool of available rentals shrinking by one-third compared to last year, pushing Brisbane’s vacancy rate to a multi-year low."
Adelaide house rents also increased by $15 a week in the March quarter, while Hobart's house rents jumped by $20 over the quarter pushing house rents to a new record high.
Sydney's house rents remained at their $550 record high over the March quarter.
But it was Canberra that trumped every capital city to be the most expensive capital city to rent a house and unit in, costing $600 and $500 a week respectively.
“Tenants have been operating in a landlords’ market for some time, and landlords are likely to have become accustomed to the fierce competition to secure a lease," Dr Powell said.
Canberra's vacancy rate plunged to 0.7% in March - 14% lower than last year.
"This is during a time Australian expats return, temporary overseas employees extend stays and the city is better placed economically, buoyed by the public sector and industries reliant on government spending," Dr Powell said.
Rents surge in outer-city regional areas as more Aussies make a sea or tree change
The trend towards moving to regional parts of the country has seen rents skyrocket, frustrating locals.
The Northern Beaches, Sutherland, outer south west, outer west and Blue Mountains in NSW, the outer east, south east and Mornington Peninsula in Victoria, and the Gold Coast and Sunshine Coast in Queensland all recorded median rental asking price growth as demand for properties in outer regions continues.
See also: The rise of regional property in COVID
In Queensland, the Gold and Sunshine Coast rental markets continue to outperform Brisbane as the annual number of residents moving from other parts of the country into the Sunshine State hits the highest level since 2006.
"Queensland has always been a preferred destination for those moving interstate. However, the pandemic has made remote working a possibility and may have fast tracked decisions or made a temporary relocation an option," Dr Powell said.
House rent prices are rising at the steepest pace of annual growth in 15 years, with house rents on the Sunshine Coast surging by $80 above last year, while house rents on the Gold Coast are $50 higher.
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