Rising to the challenge: Melbourne's rental market in 2024 and beyond
Andrew McCann - Chief Executive Officer
November 2024The rental market faced significant pressure throughout 2024, as demand continued to outpace supply.
Post-COVID lifestyle shifts drew people back to the city, partly driven by large businesses reversing work-from-home policies. The shift heightened competition for rental properties, particularly in Melbourne’s inner suburbs.
At the same time, we saw an increase in the sell-off of investment properties, due to higher borrowing costs, increased land tax and stricter compliance laws. This reduced the pool of available rental properties, resulting in higher rents and placing further strain on the market.
A lack of new housing developments, including apartments and townhouses, exacerbated the pressure, with current data showing Melbourne’s vacancy rate at just 1.5%, a low mirrored across our portfolio at Jellis Craig.
This housing shortfall highlights a broader issue: the urgent need for government action to stimulate investment activity and tackle the rental crisis. Without intervention to incentivise investors, the rental market is likely to become even more constrained.
In response to rising rents and cost-of-living pressures, tenants are increasingly looking beyond Melbourne to regional areas like Geelong and Ballarat. These areas offer an attractive combination of affordability, lifestyle, and proximity to the city, making them increasingly viable alternatives.
In 2024, Jellis Craig continued its expansion into new markets, including Mooroolbark, Lilydale, Croydon, Mentone, Chelsea, Mount Martha, Mornington, and Geelong. Our brand has been warmly received in these areas, supported by incredibly experienced teams. This growth has been instrumental in driving a 23% year-on-year increase in sales, and the number of properties under management now exceeds 25,000 across the group. It has been an exciting period of growth for both our brand and our people.
Innovation remained a key focus, with the launch of Jellis Craig Live, our exclusive vendor reporting portal. This groundbreaking tool offers home sellers real-time insights into their property campaigns, from open-for-inspection numbers to online performance metrics. The overwhelmingly positive response from clients underscores the value of transparency and exceptional service in today’s market.
This year also marked the 10th anniversary of The Jellis Craig Foundation. With the enthusiastic support of our growing team, we’ve strengthened partnerships with The Big Umbrella and The Resilience Project. In 2024, we proudly welcomed the Lighthouse Foundation as a new partner, extending our reach and commitment to meaningful change. Community contribution remains a cornerstone of our values, and we’re proud to collaborate with these inspiring organisations to create a lasting impact.
As we look to 2025, there’s every reason to be optimistic. We anticipate a steady growth trajectory with green shoots in capital gains fuelled by the expectation of a shift in interest rates. Having likely reached the peak of the current interest rate cycle, a downward adjustment could energise activity, stimulating modest price growth.
Rental demand is expected to remain strong thanks to the ongoing shortage of new housing supply. While rental costs have risen, they are largely aligning with pre-COVID levels, and further growth is likely through 2025. Predicted interest rate reductions, coupled with increased opportunity for higher rental prices and yields, may encourage investors to return to the market.
With stabilising market conditions, strong rental demand, and Jellis Craig’s commitment to innovation and community, we are poised for another dynamic year ahead.
Andrew McCann
Chief Executive Officer, Jellis Craig
