2 hours ago
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Rents in regional Victoria’s far-flung pockets are outstripping growth in traditional commuter towns, as a shortage of stock and shifting migration patterns push regional affordability to a breaking point.
Some remote Local Government Areas (LGAs) are far outpacing the rate of overall annual growth in house rents across the rest of Victoria which is 5.1 per cent, the latest Domain Rental Report, released on Thursday, shows.
Asking rents in Horsham jumped 12.8 per cent to a median of $440 a week, up from $390 just twelve months ago. In the Moira shire, the median weekly asking rent climbed 12.2 per cent to $550.
Other double-digit climbers include Golden Plains shire (up 11.6 per cent), Mount Alexander (up 11.3 per cent), Alpine (up 11.1 per cent), and Hepburn (up 10.6 per cent).
By comparison, towns within the 90-minute “commuter belt” are rising less. Greater Geelong recorded a modest increase of 4.9 per cent, while Ballarat had growth of 4.7 per cent. Only three LGAs, Wodonga, Mitchell, and the Macedon Ranges, recorded no growth or a slight decline.
Dr Nicola Powell, Domain’s chief of research and economics, said “three per cent quarterly growth is actually the strongest quarter that regional Victorian houses have seen since March 2024.”
She attributes the shift to metropolitan strain and a changing investor landscape. “We have seen investors sell out of Victoria due to taxation changes... and I do wonder whether we’ve actually seen some investor properties actually transition to being owner-occupied now.”
Powell also said that the slowing growth in major hubs like Geelong suggests those markets have hit an “affordability ceiling,” where tenants simply cannot stretch their budgets any further, forcing demand into more remote, traditionally cheaper regions.
In Horsham, the reality of the 12.8 per cent jump is being felt on the ground as rental stress, said Lionel Godwin, Director of AL Property Agents in Horsham.
“We are averaging 10 to 15 people per open house inspections at the moment, and vacancy rates would be less than 1.5 per cent,” Godwin said.
“It’s a combination of lower socio-economic and middle-class people relocating for work. We’ve got a strong industrial base, a strong agricultural base, and manufacturing is really starting to increase.”
He said the demand is pushing landlords to increase rent which is causing “a lot of anxiety” among tenants.
“There are a lot of people in that lower socioeconomic area that now breach that threshold of that more than 30 per cent of their income is being confirmed by rent, and that is causing some concern.”
The shortage of stock has become so acute that Godwin has taken matters into his own hands.
“Land supply is probably the biggest issue in terms of councils releasing enough land to build,” he said. “Within my own agency, I... have started to build structural, isolated panel homes because we can build them quicker.”
Dr Diaswati Mardiasmo, chief economist at PRD, says this influx of interest might be coming from capital cities.
“If you are someone from Melbourne... you’re coming in with potentially a bigger budget than a local person,” Mardiasmo said. “It’s also the purchasing power of people that are moving to regional areas, from capital cities as well, that’s driving it up.”
She agrees that while growth is sharp, it is a deceleration following the pandemic. “Post-COVID, most regional places were going up by like 20 to 25 per cent in rent prices. Yes, rents are still going up, but it’s going up slower.”
In Ararat, where rents rose 10.5 per cent, local businesses are increasingly forced to sign leases just to secure staff.
“We see companies that are getting staff in from out of town to fill those employment opportunities,” Jamie Lampard, Partner at Ararat Ballarat Real Estate said.
“These companies are just having a lease agreement in their name and then slotting staff members into those homes.”
Lampard says the market is incredibly tight. “In our office alone, we’ve only got four properties up for lease, and they’ll probably be rented in the next seven to 14 days. It’s a very tight rental market at the moment.”
Mardiasmo believes the sustainability of these double-digit jumps is nearing an end.
“I wouldn’t be surprised if it starts to hit the ceiling pretty soon. It’s not sustainable... the wage growth in regional areas is not as much as capital city areas. Some of these look like capital city prices to me.”
Closing the year, Powell warns that several economic triggers remain on the horizon.
“We’ve got a budget coming up too, which could have changes to capital gains tax. So there are some unknowns, plus we’ve probably got two more rate hikes coming through this year, which is going to be hard for those trying to transition to being a home buyer.”
