Why Melbourne is now the cheapest Australian city to rent a house in

It has been two uncertain years for all Australian states, but one big city has defied some odds while it has become bad for others.

Since the pandemic began, the dividing lines that exist between the various Australian states and territories have been revealed, with huge differences in social, health and economic outcomes experienced across the nation.

But even before the pandemic, the various states were not created equal, with Victoria leading the mainland states for three years in economic growth, and at times stroking far ahead of its rivals.

During the fiscal year 2018-2019, which was not affected by the pandemic, Victoria led the mainland states with a 3 percent increase in gross state product (GSP), beating its nearest rival NSW by 1.9 percent and more than double the totals for Queensland and South Australia with 1.4 per cent.

Behind the seemingly strong success story of the state, however, hid a very complex reality.

The elephant in the room

While Victoria’s nation’s leading GSP growth presents a picture of significant economic strength, the results actually achieved for Victorian’s were a whole other story.

For example, during the 2018-2019 financial year, the Victorian economy grew by 3 percent, but over the same period, the state’s population grew by 2.1 percent.

In fact, while the pie had become larger, the slice of pie that went to each Victorian had grown significantly smaller.

During 2019, Victoria was the most popular destination for new overseas arrivals with more than 75,000 choosing the state to make their home. Victoria was also the second most popular destination for interstate migration, beaten only by the nation’s sunshine state, Queensland.

This population boom greatly supported Victoria’s rise to the top of economic growth statistics, but with the advent of the pandemic, Victoria’s strength has now become its Achilles heel.

A reversal of fortunes

In the almost two years since the pandemic first came to our shores, Victoria’s influx of people has become a population exit.

Between a number of Victorians who chose to leave the country and Victorians who chose to move interstate, Victoria has faced a significant emigration.

In the year to June 2021, more than 18,000 Victorians decided to migrate to another part of the country, and another 56,000 chose to leave the country altogether.

This emigration of more than 74,000 Victorians is more than three times as large as the outflow experienced by other states, with second-place NSW losing just over 22,000 of its inhabitants to overseas and interstate migration.

Emigration and property prices

Despite these significant outflows, which represent an emigration of 1.1 percent of Victoria’s population, the state housing market has not experienced the downward pressure on property prices, which has accompanied similar large population outflows elsewhere in the world.

According to real estate data provider CoreLogic, house prices in Melbourne rose by 15.1 per cent during 2021.

Through the power of the lowest interest rates in Australian history, a commitment of more than half a trillion in stimulus from the Morrison government and pandemic-driven effects on the market, property owners were not only spared losses but rewarded.

But for those who depend on a stream of rental income from a property in Melbourne, it has been a whole different story.

Will Melbourne lose its crown?

Melbourne has long been the self-proclaimed cultural and sports center capital of the entire nation. The Melburnians hosted a vibrant art scene, the Australian Open, the AFL Grand Finals and a host of other events.

But as the population changes and more homeowners get the keys to their new homes, something very strange has happened in the country’s rental market.

According to a recent report from the real estate search portal Domain, Melbourne now has the cheapest rent in any capital at $ 445 per night. week.

Meanwhile, in the port city of Sydney, rents offer a premium of 34.8 per cent over its longtime rival, costing $ 600 a week.

Before the pandemic, Melbourne had a prize over Adelaide, Brisbane or Perth, but after two challenging years for the southernmost mainland state, things have changed.

An uncertain future

As we enter what is hoped to be a post-pandemic world, Victoria faces a different path to recovery than other parts of the nation.

After spending so much time enjoying the fruits of population growth that are helping to support the nation’s top growth rates, and with the state facing further potential population outflows, the road to recovery may be a more challenging path than those of other states and territories. transfer.

There is also the issue of a state budget that has been hit hard by two years of protracted closures and a rather large bill for all the support measures that the Andrews government has launched.

With Omicron still an important factor in defining economic performance and a still uncertain view of other variants, especially as we go back to winter, there may still be more challenges ahead for the great southern state.

At the end of the day, falling rents and a population exodus are not the doom of the world for Victoria. In the late 1970s, New York State lost hundreds of thousands of residents, only to be welcomed in droves by newly arrived lures of lower relative cost of living in the big apples, which helped create something of a renaissance for the city.

Perhaps something similar lies ahead for Melbourne, now that it is the cheapest city in the country to rent a house.

Tarric Brooker is a freelance journalist and social commentator @AvidCommentator

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