Victoria’s rental market faces a severe crisis as 24,716 rental properties disappeared between September 2023-2024, with metropolitan areas losing over 23,100 homes. The exodus stems from increased land taxes, stringent regulations, and mandatory property upgrades costing landlords up to $30,000 per property. With vacancy rates dropping to 1.18% and 25% of current listings being investment properties for sale, industry experts warn of “diabolic” conditions ahead for both landlords and tenants, signaling deeper market challenges ahead.
Highlights
- Victoria lost nearly 25,000 rental properties within one year, with metropolitan areas experiencing the most significant decline of 23,100 homes.
- Over 130 rental law reforms since 2019 and increased land taxes have driven investors away from Victoria’s property market.
- Mandatory property upgrades costing up to $30,000 per property are forcing landlords to sell or invest in other states.
- Greater Melbourne’s rental vacancy rate hit 1.18%, with 25% of current listings being investment properties for sale.
- Industry experts warn of worsening conditions for both landlords and tenants without immediate government intervention to address the crisis.
Victoria’s rental market is experiencing an unprecedented decline, with new data revealing the loss of 24,716 rental properties between September 2023 and September 2024. This significant drop in rental availability has raised serious concerns about rental affordability and tenant protections across the state, as active rental bonds decreased from 677,492 to 652,766 during this period.
Metropolitan areas bore the brunt of this decline, accounting for over 23,100 lost rental properties, while regional areas experienced a reduction of 1,618 homes.
The exodus of property investors can be attributed to multiple factors, including increased land taxes and stringent rental regulations. Since 2019, more than 130 rental law reforms have been introduced to enhance renter protections, creating what many landlords describe as an increasingly challenging investment environment.
“Many landlords are choosing to invest in other states due to the regulatory burden and rising costs in Victoria,” reports the Real Estate Institute of Victoria.
The situation appears likely to worsen, with projections indicating further declines in rental stock throughout 2025. Property listings data shows an unprecedented number of investment properties hitting the market in late 2024, suggesting a continuing trend of investor departures.
The Property Investors Council of Australia warns that the ongoing rental crisis could deteriorate further if current reform trajectories persist.
New government regulations requiring property upgrades, including mandatory insulation and energy-efficient systems, are adding to investor concerns. These improvements are estimated to cost landlords between $5,000 and $30,000 per property, creating additional financial pressure on property owners.
The proposed removal of no-fault evictions has also generated anxiety among investors, contributing to the market exodus.
The impact on renters is becoming increasingly evident, with Greater Melbourne’s rental vacancy rate dropping to 1.18% in December 2024. Market experts suggest that approximately 25% of current listings are investment properties being sold, indicating a significant shift in the market.
Without government intervention to address these challenges, industry specialists warn the situation could become “diabolic” for both landlords and tenants.
