Blake had three salaries on his rental application. It wasn’t enough

Blake Cochrane, his partner and a friend were moving in together. Cochrane is a lead teacher and the other two are lawyers, so it should have been an easy application.

Cochrane, 27, had lived in share houses before but had no other rental history, and both his partner and friend were moving out for the first time.

Their first apartment rental application was knocked back, with little feedback. It was clear it was going to be harder than they thought, even with three salaries on their application.

“It’s a very competitive market, isn’t it?” Cochrane said.

The median weekly asking rent for units in Melbourne is at a record high, hitting $600 a week in the March quarter, data from Domain’s latest Rental Report revealed on Thursday. Unit rents also eclipsed house rents ($590) for the first time.

Over the past year, unit rents rose by up to 21 per cent across Melbourne suburbs. Prestige areas such as Albert Park, Hampton East, Beaumaris and Black Rock are among the neighbourhoods with the highest annual change.

Domain chief of research and economics Nicola Powell said that in a cost-of-living crisis, and a period of uncertainty, people might choose to stay to closer to the CBD, public transport and schools, rather than moving further out for more space.

“It becomes a balance of what are you willing to compromise on,” she said, noting that people on lower incomes would have even fewer options.

The March quarter is the start of the university year, heralding the arrival of international students, and local students moving out for the first time.

“I think it really does reflect where some of the pressure points are coming from,” Powell said.

Matthew Bowes, senior associate at the Grattan Institute’s Economic Prosperity and Democracy Program, said Melbourne was leading nationally in adding supply to the housing market.

But he said the split of what supply was becoming available was also reflected in the data.

“We’re building more units in existing suburbs that people value the ability to live in,” he said.

“The new greenfield homes that we’re building are largely on the edge of our cities … further away from jobs and amenities. So they are cheaper, but they’re cheaper for a reason.”

The suburbs that had the most growth in house rents were spread across prestigious areas such as Hawthorn East, Kew and Middle Park, and slightly more affordable middle-ring suburbs.

Bowes argued this continued a long trend of land value driving up both the property and rent prices of established houses in these areas.

Powell agreed, suggesting a period of uncertainty might further boost house rents as families held off buying and waited to see if homes became more affordable.

“Which is maybe why … these middle-ring family suburbs see stronger rates of growth relative to other areas,” she said.

Cochrane and his two housemates were able to secure a two-storey unit in a block of three in Elwood.

They were referred by a friend to rental agent Codie Smith, director at Ausrental, who helped them refine their applications to focus on their employment.

“I think [agents] saw their younger ages, and three of them, and they were a little bit put off,” Smith said.

Smith thought the ban on rental bidding introduced in November could be contributing to the rise in asking rents.

He said what was ultimately a positive change could be a “double-edged sword”, with agents advertising properties at a higher price now that additional offers were not an option.

He is also seeing more off-market rentals from owners who failed to sell their home at the start of this year and were looking to make some rental income before selling later.

Powell said arrangements such as Cochrane’s – sharing units, rather than houses – were likely to become more common.

“It’s hard to describe it as ‘affordability’ where you’ve got units higher than house rents, but units are more centrally located, and they’re near infrastructure hubs,” she said.

Angela Cartwright, chief executive of tenant advocacy group Better Renting, said the data was a wake-up call.

“It makes it clear that [tenants’] frustration is not imagined,” she said. “It’s real.”

She said high rents were forcing tenants to stay in places that needed maintenance, afraid to report mandatory repairs or complain about conditions.

“We need proactive regulation so that we have government stepping in to hold landlords accountable for meeting minimum standards,” she said.

“[Tenants’] fear is that they will be back in a market with even less affordability and struggling to get anything close to what they have now, whether it’s the area where their kids go to school, or the number of rooms for their household.”