Melbourne Apartment Rates Drop Due To Building Boom

With a new year upon us, Australian mortgage holders can look forward to two interest-rate cuts in a row and the prospect of more on the way. But renters in Sydney will soon start to feel the pinch as apartment shortages cause rates to go up in the New Year, a report out this week found. But while Sydney is experiencing a squeeze, Melbourne is flush with new property, after a building boom left many Melbourne apartments ready for renters and short-stay apartment dwellers.

According to SQM Research, the vacancy rate for the month of November in Sydney was 1.5 per cent, with just 7970 houses or apartments available. Compare that with the Victorian capital, where the rate is 3.4 per cent and there were 12,367 places.

For renters and business travelers looking to find extended stay accommodations in Melbourne, this overabundance of housing will find rates reduced in 2012, as developers look to fill vacant units. Sydney renters, on the other hand, will find increased rent. According to the Sydney Morning Herald, who conducted a survey of real estate agents in December, the median rent for a Sydney apartment in the September quarter was $450 a week. In Melbourne it's $100 less. The median for a four-bedroom house in Sydney is $560. In Melbourne, it's $380.

Melbourne serviced apartments will be available for less, causing many business travelers, students and other short-stay visitors to seek better apartments closer to Melbourne, looking to keep costs down in the New Year. At least for the time being, Melbourne developers are happy to have the guests as thousands of investors—many of them from Asia—have bought in heavy in the Melbourne building boom. If their predictions are correct and housing rates hold steady, these developers can expect big returns for 2012, making the renters not the only ones hoping for a windfall in the New Year.