Melbourne Becomes Australia's Cheapest City to Rent a House

For the first time in years, one Australian city is bucking the rental crisis trend, and it's giving thousands of renters something to celebrate.

Melbourne house rents dropped 1.7 percent over the past year, making it the only capital city in Australia where rental costs actually fell. At $580 per week, Melbourne now offers the cheapest house rentals of any major Australian city.

The savings are real for everyday people. Tenants are pocketing an extra $520 per year compared to 12 months ago, while renters in Sydney pay $800 weekly for houses and those in Perth, Canberra, and Darwin shell out $700.

What makes Melbourne's turnaround especially impressive is that it happened while the city maintained its reputation as Australia's most liveable capital. The city ranks fourth globally for quality of life, praised for excellent public transport, safe streets, and green spaces.

Domain's chief of research Nicola Powell credits better housing supply and realistic landlords. Melbourne's vacancy rate hit 1.6 percent in December, the highest of any capital, giving renters more choices and negotiating power.

Smart government policies helped too. A national scheme letting first-time buyers put down just 5 percent deposits moved renters into ownership, reducing rental demand. Meanwhile, changes to investment property taxes pushed some landlords to sell, increasing available stock.

The shift shows what happens when housing supply catches up with demand. Landlords had to set realistic prices instead of constantly raising rents, hitting what experts call the "affordability ceiling."

The Bright Side

While units in Melbourne did rise to match house prices at $580 weekly, the city still offers better value than Sydney's $750 units or Brisbane and Perth's $650 rates. Only Hobart and Adelaide have cheaper apartments.

Urban planning expert Kate Raynor from the University of Melbourne says the city proves affordability and liveability can coexist. Good public spaces, connected transport, and cleaner air don't have to come with astronomical housing costs.

Powell predicts Melbourne's rental costs will stay stable as the market finds its natural ceiling. With vacancy rates still below 2 percent nationally, Australia operates in a landlord's market, but Melbourne is showing there's another way forward.

The combination of supportive policies, adequate supply, and realistic pricing created a rare bright spot in Australia's housing crisis. Other cities are watching closely, hoping to replicate Melbourne's success in balancing quality of life with actual affordability.

For Melbourne renters, it's proof that housing costs don't have to spiral forever when the right conditions align.