According to the REIV January vacancy rate release, the vacancy rate for residential properties has now been below three per cent since 2005.
REIV CEO Enzo Raimondo said that the vacancy rate in January was two per cent and that the last time the market was in balance, when a vacancy rate of 3.3 per cent was recorded, was in January 2005.
"Whilst the vacancy rate remains below three per cent, renters are likely to face higher rents due to supply shortages and higher competition.
"In the past five years, according to the Victorian Government's Office of Housing, the median rent for a three-bedroom house has increased by 43.5 per cent, compared to 21.1 per cent between 2000 and 2005. The median rent for a two-bedroom unit has increased by 54.5 per cent, compared to 25.7 per cent between 2000 and 2005.
"There is a direct link between the cumulative impacts from low levels of housing construction, increasing population and higher accommodation costs in the form of higher rents and a higher overall cost of housing.
"For the rental market the only solution is to build more homes, which investors can then make available for the rental market.
"Whilst the rate of dwelling commencements has begun to increase, this has only occurred over the last 12 months. The undersupply created between 2005 and 2009 has not been addressed.
"The area with the fewest vacancies in Melbourne during January was the outer suburbs, where the vacancy rate was 1.4 per cent. The inner suburbs – those within 10km of the CBD – recorded 1.9 per cent, with most vacancies found in the suburbs within 4km. The middle suburbs recorded a vacancy rate of 2.3 per cent, down from the 3.1 per cent recorded in December." Mr Raimondo concluded.
Key rental statistics 2000-2010
• Average rental vacancy rate 2000–2005 3.4%
• Average rental vacancy rate 2005–2010 1.4%
• Increase in median rent for 3-bedroom house 2000–2005 21.1%
• Increase in median rent for 3-bedroom house 2005–2010 43.5%