Current Rental Market Trends – December Quarter 2025
Throughout the December quarter, Victoria’s rental market showed early signs of stabilisation, particularly across metropolitan Melbourne. While conditions remained competitive, data indicated that the intense pressure experienced earlier in the year had begun to ease slightly largely due to modest improvements in supply and softer rent growth.
Rental demand remained elevated, supported by population growth, constrained construction pipelines, and ongoing affordability challenges in the purchase market. As a result, the rental environment shifted away from rapid acceleration but continued to favour well-located, quality homes.
Rental Market Snapshot, according to the Real Estate Institute of Victoria (REIV):
According to the Real Estate Institute of Victoria (REIV):
- Metropolitan Melbourne vacancy rate: 2.4%, holding steady over the month
- Regional Victoria vacancy rate: Increased to 2.1%
- Median weekly house rent (Metropolitan Melbourne): $580 per week, reflecting a slight softening
- Median weekly house rent (Regional Victoria): $500 per week, unchanged
What Drove the December Quarter Results?
Several key factors shaped rental market conditions during the final quarter of 2025:
- Rental Market Normalisation: After a prolonged period of strong rental growth, some metropolitan areas experienced a levelling out of rents, providing limited relief for tenants.
- Improving Supply Conditions: Rising vacancy rates in regional Victoria suggested that additional rental stock had come online, particularly in areas that had seen strong investor and development activity in recent years.
- Affordability Pressures: Household budget constraints influenced renter behaviour, resulting in greater price sensitivity and reduced tolerance for further sharp rent increases.
- Interest Rate Environment: Elevated borrowing costs continued to delay some buyer decisions, keeping demand within the rental sector while encouraging investors to prioritise stable, long-term cash flow.
What This Meant for Renters
While competition eased slightly in select areas, rental conditions remained tight by historical standards. Renters who approached the market strategically were better positioned to secure suitable homes:
- Monitoring listings closely and acting quickly
Considering alternative suburbs or dwelling types
Preparing complete applications in advance
Leveraging higher vacancy levels where available to negotiate lease terms
Investor Perspective – Key Takeaways from December 2025
For investors, the December quarter highlighted a transition from extreme rental tightness toward a more balanced, yet still resilient-market. Stable rents, marginally higher vacancy rates, and ongoing housing undersupply continued to support long-term rental fundamentals, particularly for well-located, energy-efficient, and low-maintenance properties.
Looking ahead, rental performance was increasingly influenced by property quality and location, reinforcing the importance of disciplined asset selection.
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