Hottest rental suburbs in Melbourne for 2018

Contributing to their growth is the high demand and relatively low supply, which decreases vacancy rates and provides solid rental yield to investors, economist Nerida Conisbee said.

In fact, during the busiest time of the year, a good rental property—presented well and priced right—sees 20 to 30 people at inspections.

Moreover, SQM Research data stated that weekly rents go up at 4.6 per cent for houses and 5.5 per cent for units within 12 months.

Also included in realestate.com.au’s ‘Melbourne’s hottest rental suburbs’ list are:

St Kilda East—$643 median weekly rent
Clifton Hill—$650
Elwood—$850
South Yarra, Hawthorn—$985
North Melbourne—$580
Spotswood—$480

Despite the demand rising to 23 per cent, rental prices in Melbourne’s inner-city markets remain lower than most parts of Sydney, according to Ms Conisbee.

Apartments and units near CBD

Aside from houses, apartments and units have also gained popularity in the rental market because of their affordability.

Positive Real Estate’s Sam Saggers said that a lot of investors have jumped into the “apartment market” to enjoy good capital growth for fewer costs.

The demand for apartments and units has risen particularly in suburbs near the central business district, he said.

Mr Saggers explained: “For the first time in the history of Melbourne, people are now choosing the residential apartment space to live—close to ... a 24-hour city. It's becoming that New York-style concept.”

An example of good bargains in the Melbourne apartment market are units in Toorak, which are usually priced at $940,000. In contrast, houses in the suburbs may cost around $4.6 million, according to data from the Real Estate Institute of Victoria (REIV).

Other good rental suburbs in the city are Hawthorne, where units usually cost around $611,000, and Caulfield North, where you can buy a unit for $661,000.

Last year, the apartment market in Melbourne saw double-digit price increases across markets, REIV’s Richard Simpson said, indicating an upward movement for the said suburbs in the coming months.

He highlighted: “Apartments and units are ideal for buyers who don’t want to compromise on location or amenities, offering an entry point to many of Melbourne’s most expensive suburbs.”

“Apartments allow buyers to enter a multimillion-dollar suburb for just a fraction of the price of houses in the same suburb,” the property professional added.

Aside from affordability, strong capital gains have also been attracting investors to the apartment market, particularly in the inner- and middle-ring suburbs like Thomastown, Reservoir and Thornbury, Mr Simpson said.

Also considered as Melbourne’s most in-demand rental suburbs for units, based on realestate.com.au’s median weekly rent data, are:

Clifton Hill—$440 
Albert Park—$450
Fitzroy North—$450
Hampton East—$415
Kingsville—$310
Collingwood—$500
Middle Park—$465
Carlton North—$420
Fitzroy—$570
Seddon—$375

This information has been sourced from the realestate.com.au and The Smart Property Investment Show website.