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A significant number of rental homes are set to be added to Melbourne's Docklands area.
Victoria has seen the second fastest rate of rent growth in the country over the past year, with more than three-quarters of Victorians currently experiencing extreme rent increases.
But there are signs that plans to help the state emerge from its housing and rental crisis are having an impact, with the government on Monday approving plans for two tenant-only towers in Docklands with a total of 925 units.
Combined with past approvals, there could be more than 2,000 rental-only homes built in the city's suburbs.
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But tenants struggling to find affordable housing are likely to be in trouble for some time yet, with SuburbTrends' latest Rent Distress Index showing that four in Victoria, including Heathcote, Dandenong and Templestowe, Currently, the highest rates are in the Newcombe and Moorup regions of Geelong. Rental pain levels that the index can track.
Created by renowned housing data analyst Kent Lardner, it evaluates rent growth, vacancy rates, and rent affordability as a percentage of an area's typical income over the past year. Set a number between 100 and 100, with a higher score meaning worse tenant conditions. .
Kent Lardner, founder of Suburb Trends.
In addition to the four regions scoring 100, a further 22 regions were ranked between 96 and 99, with a whopping 78% of regions in Victoria scoring above 75.
“A score of 100 is terrible for living and finding a home. You'll be worried about the next rent review,” Lardner said.
“It’s also not good for landlords because people struggle to pay rent over 95.”
Victoria's worst rental housing areas
Heathcote – 37% of income – 100% of pain.
Dandenong South – 37% of income – 100% pain.
Templestowe – 35% of income – 100% pain.
Newcombe Moorup – 35% of income – 100% pain.
Doncaster – 38% of income – 99% of pain
Maryborough – 37% of income – 99% of pain
Clayton Notting Hill – 35% of income – 99% of pain
Sebastopol Redan – 34% of income – 99% of pain
Sandringham-Blackrock – 34% of income – 99% of pain
California Gully Eaglehawk – 34% of income – 99% of pain
Source: SuburbTrends May Rent Pain Index
To add insult to injury, tenants in Victoria's toughest rental market pay up to 38% of their wages in rent, compared to more than 40% on interstates, and rents in the region will rise even further. That shows it's possible, he said.
This follows a 12 per cent increase in the past year which shows the state's rents are the second fastest growing state in the country, with only Western Australia doing worse.
However, there was a glimmer of hope for tenants yesterday as the State Government approved a pair of 925-unit tenant-only towers by developer Ash Morgan in the Docklands.
The development also includes plans for ground floor retail space and a public plaza.
The development at 24 Little Docklands Drive in Docklands will see the creation of more than 900 new rental homes.
The agreement is thought to increase the number of homes under construction or under consideration in the suburb since 2000 and be set aside for renters, with developers such as Lendlease, Salta Properties and Tim Garner Additional construction projects are also in various stages.
Charter Keck Kramer's analysis tracked the rapid rise in build-to-rent or tenant-only developments in Melbourne. In 2023, he expects 580 apartments to be completed and approximately 13,900 apartments to be completed in the next three years.
A further 18,200 have been approved or are in the early stages of the planning process.
Planning Minister Sonya Kilkenny said Victoria led the nation in build-to-rent housing but would continue to explore other ways to boost housing supply.
“As long as rental supply remains low, rental prices will remain high,” Kilkenny said.
“That's why we're approving and delivering more rental housing in established suburbs, close to work, transport and services, ensuring affordable housing is available to Victorians who need it most. I am doing it.”
An open plaza is also part of the redevelopment plan.
Lardner said it would be good to see more ready-to-use housing construction, but it's unlikely that homes will be built to accommodate tenants looking for affordable options, and it will take time.
“We need things for the pipeline, and we need a huge amount right now. Otherwise we only have tents and cars,” he said.
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