Melbourne Landlords Under Pressure: But Is This a Warning or an Opportunity?

If you’ve been reading the headlines, you’d think Melbourne landlords are under siege, and in many ways, they are.

But as always, the devil is in the details, and the narrative isn’t as one-sided as it seems.

Yes, rents have declined or flattened in several Melbourne suburbs, and yes, landlords are facing an increasingly hostile investment climate in Victoria.

But before we panic, let’s dissect what’s really going on.

And whether this environment spells danger or long-term opportunity for savvy investors.

What the data is really telling us

PropTrack data shows median weekly rents have declined in select Melbourne suburbs over the year to February 2025 — with Caulfield houses topping the list, dropping $100 per week (a 10.3% fall).

Other suburbs like Kew East, McKinnon, and Middle Park have seen more modest decreases of $20 to $60 a week.

At first glance, this might look like investors are bleeding cash.

But remember: median rent data reflects what’s transacting now, not necessarily what’s happening across the entire rental market.

In fact, declines in some suburbs can mask rent growth or stabilisation in neighbouring areas.

It can be noted that these “declines” are not widespread.

They may be isolated to suburbs with specific characteristics, like those heavily reliant on student renters or areas where new supply has recently surged.

And more recent data suggests Melbourne rentals are rising again.

A perfect storm of policy and perception

What’s really creating the sense of siege is not just rent softening — it’s the Victorian government’s attitude toward property investors.

Over the past six years, we’ve seen more than 130 changes to residential tenancy laws, making Victoria the most regulated rental market in the country.

Add to that a slew of new and proposed taxes — from higher land tax thresholds to the new Emergency Services Property Levy — and it’s no wonder landlords feel like they’re being punished for investing in their own state.

These policies, whether politically motivated or not, are having very real consequences.

The double-edged sword of supply and demand

Note: When rental prices decline in certain pockets, it’s often due to a supply-demand imbalance.

Factors such as increased household formation, renters becoming first-home buyers, and the supply of new dwellings aslo contribute to this trend.

Some areas, particularly around universities and inner-city apartments, are seeing reduced demand due to falling student numbers and government-imposed caps on international enrolments.

But here's the key point savvy investors understand: this isn’t a blanket market downturn — it’s a tale of two Melbournes.

In many Melbourne rental demand remains robust, with investors (including those from interstate) quietly snapping up properties at what they see as “bargain” prices.

They’re playing the long game — betting on Melbourne’s eventual return to form once economic momentum returns, the policy cycle shifts and population rebounds.

So, should you still invest in Melbourne?

Tip: The market’s short-term mood swings are not your investment compass.

Let’s be clear: blanket negativity never serves an investor well.

While Victoria’s current investment climate is less than ideal, it's not permanent.

Political cycles change.

Economic conditions evolve.

And savvy investors know that the best time to buy is often when others are fearful, provided you do so strategically.

Yes, some areas may underperform in the short term, especially those with oversupply or declining demand.

But that doesn’t mean Melbourne as a whole is broken.

Tip: You don’t need the market to be perfect. You need your strategic property plan to be bulletproof.

Here’s my take:

• Don’t follow the herd. Much of the pain landlords are feeling is concentrated in certain micro-markets. Look beyond the headlines and do your due diligence suburb by suburb.

• Buy strategically, not emotionally. Focus on investment-grade locations with strong long-term fundamentals — jobs growth, infrastructure investment, gentrification potential and demographic appeal.

• Get expert advice. In a high-risk environment like this, a seasoned advisor can help you avoid costly mistakes and uncover hidden gems others are ignoring.

Final thoughts

For the last few years Melbourne's property market was is in a holding pattern — weighed down by weak economic performance, poor political optics, and overzealous regulation.

But history shows us that these are exactly the conditions in which savvy investors position themselves for the next upswing.

The state government may be discouraging local investors, but the broader fundamentals like population growth, constrained land supply, and lifestyle appeal haven’t gone away.

In fact, those pulling back now may find themselves priced out when the tide turns.

And rest assured, it will turn because it always does.

In fact the Melbourne property market seems to have turned the corner with rising values over the last few months as well as falling vacancy rates.

It's a little too early to be sure, but I believe we've reached the bottom of the Melbourne property market cycle.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.