Landlords in Melbourne are seeing conditions improve, although vacancies in the CBD indicate the city is still suffering from an over-supply.
Data released by SQM Research shows availability throughout the city is at 2.1 per cent, a figure last seen in September 2010.
The rate has fallen by 0.3 per cent in the past month and 0.5 per cent in the past year, the biggest improvement of any capital city.
This increased competition among tenants has pushed up rents, particularly in the unit sector.
House rents climbed by 1.6 per cent over the past year while unit rents grew by 3.1 per cent.
However, SQM managing director Louis Christopher warned CBD areas remain over-supplied.
Vacancies are as high as 4.7 per cent in Melbourne city and 4.5 per cent in Docklands.
Mr Christopher said this trend was also apparent in the inner-city areas in other major capitals.
“Our warning on certain capital city CBDs remains and indeed with the large surge in dwelling approvals, we strongly believe CBD vacancy rates are set to climb from already elevated levels as we head in 2015 and 2016,” he said.
Nationally, vacancies are down by 0.1 per cent, breaking the upwards trajectory of previous months.