Melbourne Rental Affordability Hits Record Low

Rental affordability has stabilised in Melbourne after rapid declines in recent years - but remains at record lows, according to the 11th annual National Shelter-SGS Economics and Planning Rental Affordability Index released today.

The index, which compares rents to incomes, found Melbourne's affordability did not change in the past 12 months following a 22% drop from 2021 to 2024. The city's median rent of $570 still consumes 25% of the median rental household income of $116,640, up from 19% four years ago.

The Rental Affordability Index now includes Housing All Australians as a key partner, reflecting the critical role of business and public-private partnerships in addressing the nation's housing crisis.

The Index found low income households continue to face the most pressure, with people receiving JobSeeker facing Critically Unaffordable rents, while single part-time workers receiving parent benefits and single pensioners face Extremely Unaffordable rents.

"The stabilisation of rental affordability is encouraging but there is a long way to go to lift it above crisis levels for many households," said Tenants Victoria CEO Jennifer Beveridge.

"People on low and even middle incomes are still struggling to find homes they can afford and are being pushed further out of the city. We need to pull every lever to fix this crisis, including greater and faster investment in social and affordable housing."

SGS Economics & Planning Principal Ellen Witte said: "Melbourne's affordability has stabilised as rents are no longer rising faster than wages. However, the rapid declines seen across many suburbs over the past five years have not reversed.

"Before 2020, renters could still find affordable homes within 5-10km of the CBD in areas like Footscray, North Melbourne, Parkville, Carlton, and Hawthorn in the southeast. An affordable corridor once stretched from Footscray to Meadow Heights, but it has now almost completely vanished. Many inner-city suburbs, including Docklands and South Bank, are now considered 'Unaffordable'."

Coburg and Preston have historically offered more affordable options, but they are now classified as Moderately Unaffordable.

The only two postcodes across Melbourne that are classified as Acceptable are Melton (37km west of the CBD) and Campbellfield (13km north), meaning renters need to travel far to find affordable rentals.

Robert Pradolin, Founder & Executive Director of Housing All Australians, which has recently become a partner in the Affordability Index, said the rental crisis was having a major negative impact on Melbourne's economy and communities.

"When workers have to commute so far they wake up at the crack of dawn and end up starting work exhausted, Melbourne's productivity and prosperity is held back," he said.

"Melbourne's essential workers such as hospitality staff and nurses are being priced out of the city, which is hugely damaging for the business and communities they serve.

"Affordable housing is essential economic infrastructure like roads and rail. Governments can't fill our housing shortfall on their own and so innovative public-private partnerships will continue to be absolutely vital in turning this crisis around."

* Table comparing each household in Greater Melbourne and their rent as a share of income, as well as RAI score and affordability.