• Melbourne is now the second most affordable capital city in Australia to rent.
• Domain data published on Thursday shows that it is almost the only state capital where rents aren’t rising or holding steady.
• “Inner Melbourne units have felt the brunt, rents are now at 2010 levels after tumbling by $110 a week annually.,” Domain senior analyst Nicola Powell said.
• Visit Business Insider Australia’s homepage for more stories.

The Victorian city is the only state capital where rents are still falling, as the rest of the market continue to tighten.

The latest Domain data shows Melbourne has been bucking national trends, offering better value to tenants than it was just 12 months ago.

“For the first time on record, Melbourne is the second most affordable capital city to rent a house, joint with Perth and behind Adelaide,” Domain senior research analyst Nicola Powell said, adding it was also the third most affordable market to rent a unit.

In the three months to March, Melbournians could expect to pay $375 a week for an apartment, almost $100 less than Sydney residents. Houses are meanwhile asking $430 a week, a whopping $170 less than those in Canberra.

Both dwelling types are $10 cheaper than they were last year, making Melbourne the only housing market where rents are still softening. In fact, Melbourne houses are 2.3% cheaper than they were this time last year, while those in Perth and Darwin have shot up by almost 15%.

Units meanwhile are nearly 13% cheaper than this time last year in Melbourne, compared to increases among every market outside of Sydney.

Given tenants in Perth and Adelaide continue to pay more with each passing month, Powell says it is likely Melbourne will soon be the most affordable city in the country as property vacancies remain higher.

“[Melbourne’s] bounce in estimated vacant rentals is directly related to reduction in demand as a result of international border closures that have curtailed overseas migration and foreign student numbers, as well as more tenants becoming homeowners and remote working resulting in an exodus of city residents to lifestyle locations,” she said.

“Inner Melbourne units have felt the brunt, rents are now at 2010 levels after tumbling by $110 a week annually.”

Further afield it’s a very different story. Melbourne’s outer east and south east as well as the nearby Mornington Peninsula have all hit record rental highs.

Getting out of Victoria, renters are almost without exception paying more for a place to live. In fact, outside of Melbourne, Sydney units are the only part of the market to have fallen at all, dropping almost 10% in the last 12 months.

“Unit rents have been falling annually since 2018 as increased development and investment activity started to provide greater choice for tenants,” Powell said. “The pandemic has also created opportunities for tenants to move further afield or become homeowners and reduced rental demand from overseas has weighed more heavily on unit rents.”

Elsewhere, rental markets are becoming increasingly tight as tenants compete for fewer properties. Adelaide and Hobart are both at record highs, while Perth rents are their highest in six years. Canberra has overtaken Sydney as the most expensive rental city, while Darwin houses now cost the same as ones in Sydney.

House prices continue to surge higher in every market, giving many tenants little alternative.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.