Authored by the expert who managed and guided the team behind the Australia Property Pack
Yes, the analysis of Melbourne's property market is included in our pack
Everything you need to know about renting out a property in Melbourne as a foreigner is covered in this guide, written as of early 2026.
We constantly update this blog post to reflect the latest regulations, market data, and rental trends in Melbourne.
The information here is based on official Australian government sources, Victorian state authorities, and reputable property data providers.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Melbourne.
Insights
- Melbourne units deliver around 4.5% gross rental yield in early 2026, which drops to roughly 3.0% net after Victoria's absentee owner surcharge and other holding costs eat into your returns.
- Foreigners cannot buy established dwellings in Australia until at least 31 March 2027, so most foreign investors in Melbourne are limited to new apartments, townhouses, or house-and-land packages.
- Victoria's 7.5% short stay levy on rentals under 28 nights significantly reduces Airbnb profitability, making long-term leasing more attractive for many Melbourne investors.
- Melbourne's vacancy rate sits at 2.0% as of December 2025, which is more balanced than Perth or Adelaide but still means landlords can expect properties to lease within 2 to 4 weeks.
- Inner-city apartment buildings in Melbourne can now ban short-stay accommodation since January 2025, which creates real risk for investors targeting CBD, Southbank, or Docklands stock.
- A typical 2-bedroom apartment in Melbourne rents for around A$2,640 per month (about US$1,650 or €1,530), while studios start around A$1,950 per month.
- The City of Melbourne has over 4,100 residential properties used for short stays, making inner-city Airbnb highly competitive and sensitive to policy changes.
- Foreign property owners in Victoria face an absentee owner land tax surcharge on top of regular land tax, which is a Melbourne-specific cost that many investors underestimate.
- Furnished apartments rent 1 to 2 weeks faster than unfurnished in student and expat areas like Carlton, Parkville, and Southbank, but add wear-and-tear costs.
Can I legally rent out a property in Melbourne as a foreigner right now?
Can a foreigner own-and-rent a residential property in Melbourne in 2026?
As of early 2026, foreigners can legally own residential property in Melbourne and rent it out, but there are strict rules on what type of property you can actually purchase.
The main legal arrangement for foreigners is to buy through their own name with Foreign Investment Review Board (FIRB) approval, though some use Australian companies or trusts in more complex situations.
The biggest restriction right now is that foreign persons generally cannot buy established (existing) dwellings in Australia from 1 April 2025 to 31 March 2027, which means most foreign investors must focus on new dwellings like off-the-plan apartments or house-and-land packages.
If you're not a local, you might want to read our guide to foreign property ownership in Melbourne.
Do I need residency to rent out in Melbourne right now?
No, you do not need to be an Australian resident to rent out a property in Melbourne, as non-resident owners can legally collect rental income from overseas.
However, you will need an Australian Tax File Number (TFN) to properly declare your rental income, and the Australian Taxation Office has a specific process for people living outside Australia to apply.
You do not strictly need an Australian bank account since property managers can collect rent into a trust account and transfer funds to you internationally, though many landlords find a local account simplifies payments.
Managing a Melbourne rental entirely from overseas is practically feasible if you hire a licensed property manager, which most remote investors do to handle inspections, repairs, tenant issues, and compliance with Victorian tenancy laws.
Thinking of buying real estate in Melbourne?
Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.
What rental strategy makes the most money in Melbourne in 2026?
Is long-term renting more profitable than short-term in Melbourne in 2026?
As of early 2026, long-term renting is generally the safer and more predictable option in Melbourne, though short-term can generate higher gross revenue in specific high-demand pockets like the CBD or inner lifestyle suburbs.
A well-managed long-term rental in Melbourne might net around A$28,000 to A$32,000 per year (US$17,500 to US$20,000 or €16,000 to €18,500) for a typical unit, while a comparable short-term rental in a prime location could gross A$35,000 to A$45,000 (US$22,000 to US$28,000 or €20,000 to €26,000) but with higher costs and the 7.5% Victorian short stay levy reducing that advantage.
Short-term renting tends to outperform in tourist-heavy or event-driven areas like Southbank, St Kilda, and the CBD, but these locations also face the highest risk of building bans and regulatory changes that can suddenly restrict your operations.
What's the average gross rental yield in Melbourne in 2026?
As of early 2026, the average gross rental yield for residential properties in Melbourne ranges from about 3.0% for houses to 4.5% for apartments, depending on what you buy and where.
Most Melbourne residential properties fall within a gross yield range of 2.5% to 5.0%, with inner-city units at the higher end and premium family homes in the eastern suburbs at the lower end.
Apartments and units typically achieve the highest gross rental yield in Melbourne because their purchase prices are lower relative to the rents they command, while houses have higher absolute rents but much higher purchase prices that compress the yield percentage.
By the way, we have much more granular data about rental yields in our property pack about Melbourne.
What's the realistic net rental yield after costs in Melbourne in 2026?
As of early 2026, the realistic net rental yield after all operating costs (but before mortgage interest) is around 2.5% to 3.0% for Melbourne apartments and 1.8% to 2.5% for houses.
Most Melbourne landlords actually experience net yields in the range of 1.5% to 3.5%, with the wide variation depending on property type, location, and whether they face Victoria's foreign owner surcharges.
The three main cost categories that reduce gross yield to net yield in Melbourne are Victoria's absentee owner land tax surcharge (which hits foreign and non-resident owners hard), owners corporation fees for apartments (often A$3,000 to A$8,000 per year), and property management plus letting costs (typically 7% to 9% of rent plus leasing fees).
You might want to check our latest analysis about gross and net rental yields in Melbourne.
What monthly rent can I get in Melbourne in 2026?
As of early 2026, typical monthly rents in Melbourne are around A$1,950 (US$1,220 or €1,130) for a studio, A$2,250 (US$1,410 or €1,300) for a 1-bedroom, and A$2,640 (US$1,650 or €1,530) for a 2-bedroom apartment.
A realistic entry-level monthly rent for a decent studio in Melbourne is A$1,700 to A$2,100 (US$1,060 to US$1,310 or €980 to €1,220), depending on location and condition.
For a typical 1-bedroom apartment in Melbourne, expect a mid-range monthly rent of A$2,000 to A$2,500 (US$1,250 to US$1,560 or €1,160 to €1,450), with inner suburbs commanding the higher end.
A typical 2-bedroom apartment in Melbourne rents for A$2,400 to A$2,900 per month (US$1,500 to US$1,810 or €1,390 to €1,680), with premium inner-east and bayside locations pushing well above this range.
If you want to know more about this topic, you can read our guide about rents and rental incomes in Melbourne.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
What are the real numbers I should budget for renting out in Melbourne in 2026?
What's the total "all-in" monthly cost to hold a rental in Melbourne in 2026?
As of early 2026, the total "all-in" monthly cost to hold a typical rental property in Melbourne (excluding mortgage payments) is around A$900 to A$1,450 (US$560 to US$900 or €520 to €840) for an apartment and A$800 to A$1,400 (US$500 to US$875 or €465 to €810) for a house.
A realistic low-to-high monthly cost range that covers most standard Melbourne rentals is A$700 to A$1,600 (US$440 to US$1,000 or €405 to €930), with the variation driven by property type, location, and whether you face foreign owner surcharges.
The single largest cost category for Melbourne apartment owners is typically owners corporation (strata) fees, which can run A$250 to A$700 per month for inner-city buildings with lifts, pools, or gyms.
You want to go into more details? Check our list of property taxes and fees you have to pay when buying a property in Melbourne.
What's the typical vacancy rate in Melbourne in 2026?
As of early 2026, Melbourne's vacancy rate sits at around 2.0%, which makes it the most balanced rental market among Australia's major capital cities according to SQM Research's December 2025 data.
Melbourne landlords should realistically budget for 2 to 4 weeks of vacancy per year (roughly half a month to one month), because even in a tight market, tenant changeovers, minor repairs between tenancies, and marketing time add up.
The main factor that causes vacancy rates to vary across Melbourne neighborhoods is proximity to employment hubs and universities, with areas like Carlton, Parkville, and the CBD having tighter vacancies due to constant student and professional demand.
Tenant turnover in Melbourne typically peaks around December to February (end of year and summer holidays) and again in June to July (end of financial year), when leases commonly expire and people relocate for work or study.
We have a whole part covering the best rental strategies in our pack about buying a property in Melbourne.
Get fresh and reliable information about the market in Melbourne
Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.
Where do rentals perform best in Melbourne in 2026?
Which neighborhoods have the highest long-term demand in Melbourne in 2026?
As of early 2026, the top three neighborhoods with the highest overall long-term rental demand in Melbourne are Richmond, South Yarra, and Brunswick, all of which combine strong public transport links, lifestyle amenities, and a diverse renter pool.
Families looking for long-term rentals in Melbourne gravitate toward Camberwell, Glen Iris, Malvern, and Essendon, where good schools, parks, and quieter streets create stable tenancies that often last two years or more.
Students drive the strongest long-term rental demand in Carlton, Parkville, North Melbourne (near University of Melbourne and RMIT), and Clayton and Caulfield (near Monash University campuses).
Expats and international professionals tend to cluster in Southbank, Docklands, the CBD, and premium bayside suburbs like Albert Park and Port Melbourne, where modern apartments and proximity to the city center appeal to corporate relocations.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Melbourne.
Which neighborhoods have the best yield in Melbourne in 2026?
As of early 2026, the top three neighborhoods with the best rental yield in Melbourne are Footscray, West Melbourne, and Clayton, where relatively lower purchase prices combine with solid rents from students and young professionals.
The estimated gross rental yield range for these top-yielding Melbourne neighborhoods is 4.5% to 5.5%, compared to the city-wide average of around 3.5% to 4.0% for apartments.
The main characteristic that allows these neighborhoods to achieve higher yields is their large supply of affordable investment-grade units near universities or transport hubs, which keeps purchase prices in check while rents stay supported by consistent demand.
We cover a lot of neighborhoods and provide a lot of updated data in our pack about real estate in Melbourne.
Where do tenants pay the highest rents in Melbourne in 2026?
As of early 2026, the top three neighborhoods where tenants pay the highest rents in Melbourne are Toorak, Brighton, and South Yarra, where premium homes and apartments regularly command A$4,000 to A$8,000 per month (US$2,500 to US$5,000 or €2,300 to €4,650).
A standard apartment in these premium Melbourne neighborhoods typically rents for A$3,500 to A$5,500 per month (US$2,190 to US$3,440 or €2,030 to €3,190), while larger family homes can exceed A$10,000 per month.
The main characteristic that makes these neighborhoods command the highest rents in Melbourne is their combination of prestigious school zones, established tree-lined streets, proximity to private clubs and boutique shopping strips, and a scarcity of new development that keeps supply tight.
Tenants in these highest-rent Melbourne neighborhoods are typically senior executives, business owners, wealthy expat families, and high-net-worth individuals who prioritize prestige addresses and are willing to pay a significant premium for location and lifestyle.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Australia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What do tenants actually want in Melbourne in 2026?
What features increase rent the most in Melbourne in 2026?
As of early 2026, the top three property features that increase monthly rent the most in Melbourne are secure parking (especially in inner suburbs where street parking is difficult), reverse-cycle heating and cooling (Melbourne's variable climate makes this essential), and a private outdoor space like a balcony or courtyard.
Secure parking in inner Melbourne adds an estimated 8% to 12% rent premium, which can translate to an extra A$180 to A$300 per month for apartments in areas like Fitzroy, Richmond, or South Yarra.
One commonly overrated feature that Melbourne landlords invest in but tenants do not pay much extra for is high-end kitchen appliance upgrades, since renters appreciate functional appliances but rarely pay a significant premium for premium brands over standard quality.
One affordable upgrade that provides a strong return on investment for Melbourne landlords is installing a split-system air conditioner, which typically costs A$1,500 to A$2,500 but can justify A$20 to A$40 more per week in rent and significantly reduce vacancy time.
Do furnished rentals rent faster in Melbourne in 2026?
As of early 2026, furnished apartments in Melbourne typically rent 1 to 2 weeks faster than unfurnished ones, particularly in student areas like Carlton and Parkville and expat-heavy locations like Southbank and Docklands.
Furnished apartments in Melbourne generally command a rent premium of 10% to 20% over comparable unfurnished units, though this premium is offset by higher wear-and-tear costs and the need to replace furniture every few years.
Get to know the market before you buy a property in Melbourne
Better information leads to better decisions. Get all the data you need before investing a large amount of money. Download our guide.
How regulated is long-term renting in Melbourne right now?
Can I freely set rent prices in Melbourne right now?
Landlords in Melbourne have significant freedom to set the initial rent price at whatever the market will bear when signing a new lease, with no government-mandated starting rent caps in early 2026.
However, once a tenant is in place, rent increases during a tenancy are limited to no more than once every 12 months, require at least 90 days written notice using the correct form, and can be challenged by tenants if considered excessive.
What's the standard lease length in Melbourne right now?
The standard lease length for residential rentals in Melbourne is 12 months, though 6-month and 24-month leases are also common depending on landlord and tenant preferences.
The maximum security deposit (called "bond" in Australia) that a Melbourne landlord can legally require is one month's rent if the weekly rent is A$900 or less (about A$3,900 per month, US$2,440 or €2,260), and there is no cap for rentals above that threshold.
At the end of a tenancy in Melbourne, the bond must be returned within 10 business days of the tenant vacating if there are no disputes, or landlords can make a claim through the Residential Tenancies Bond Authority for unpaid rent or damage beyond normal wear and tear.
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
How does short-term renting really work in Melbourne in 2026?
Is Airbnb legal in Melbourne right now?
Airbnb-style short-term rentals are legal in Melbourne as of early 2026, but they operate under a compliance framework that includes state taxes and potential building-level restrictions.
There is no single citywide license required, but all short-term rental hosts must pay Victoria's 7.5% short stay levy (introduced 1 January 2025) on bookings under 28 nights, which is collected through platforms like Airbnb or paid directly by hosts.
Melbourne does not have a statewide cap on the number of nights per year you can rent short-term, but individual apartment buildings can now pass rules to ban short-stay accommodation entirely since 1 January 2025, which is a real risk in CBD, Southbank, and Docklands towers.
The most common consequence for operating a non-compliant short-term rental in Melbourne is being hit with the unpaid levy plus penalties from State Revenue Office Victoria, or facing legal action from your owners corporation if your building has banned short stays.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in Melbourne.
What's the average short-term occupancy in Melbourne in 2026?
As of early 2026, the average annual occupancy rate for short-term rentals in Melbourne is around 55%, which translates to roughly 16 to 17 nights booked per month.
Most Melbourne short-term rentals experience occupancy rates in the range of 40% to 70%, with well-located and well-reviewed listings at the higher end and oversupplied or poorly managed properties struggling at the lower end.
The highest occupancy rates for Melbourne short-term rentals typically occur during major events like the Australian Open (January), Melbourne Cup Carnival (November), and the Formula 1 Grand Prix (March), plus the summer holiday period from December to February.
The lowest occupancy rates for Melbourne short-term rentals usually hit during the winter months of June to August, when tourism drops and there are fewer major events drawing visitors to the city.
Finally, please note that you can find much more granular data about this topic in our property pack about Melbourne.
What's the average nightly rate in Melbourne in 2026?
As of early 2026, the average nightly rate for short-term rentals in Melbourne is around A$180 (US$113 or €105), though this varies significantly by property type and location.
A realistic low-to-high nightly rate range that covers most Melbourne short-term rental listings is A$100 to A$350 (US$63 to US$220 or €58 to €203), with basic studios at the low end and premium apartments or houses at the high end.
The typical nightly rate difference between peak season and off-season in Melbourne is around A$40 to A$80 (US$25 to US$50 or €23 to €46), with major event periods like the Australian Open pushing rates even higher than normal summer peaks.
Is short-term rental supply saturated in Melbourne in 2026?
As of early 2026, the short-term rental market in Melbourne's inner city is moderately saturated, with over 4,100 properties operating as short stays in the City of Melbourne municipality alone, creating real competition for bookings.
The trend in active Melbourne short-term rental listings has been relatively stable over the past year, as new building bans and the short stay levy have discouraged some operators while others continue to enter the market.
The most oversaturated neighborhoods for short-term rentals in Melbourne are the CBD (postcode 3000), Southbank, and Docklands, where the high concentration of investor-owned apartments creates intense competition and puts downward pressure on rates and occupancy.
Neighborhoods that still have room for new short-term rental supply in Melbourne include inner-west areas like Footscray and Seddon, and bayside suburbs like St Kilda East and Elwood, where short-stay density is lower and demand from visitors seeking alternatives to the CBD remains solid.
Don't lose money on your property in Melbourne
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Melbourne, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| Australian Taxation Office (ATO) | It's the Australian government tax authority explaining current federal policy. | We used it to confirm the ban dates on foreign purchases of established dwellings. We also used it to frame what foreigners can realistically buy before thinking about rent. |
| Foreign Investment Review Board (FIRB) | It's the official regulator guidance on what foreign persons can buy. | We used it to explain the FIRB approval rule for foreigners buying residential property. We used it to keep ownership information accurate across property types. |
| State Revenue Office Victoria (FPAD) | It's Victoria's official tax office for stamp duty and foreign buyer surcharges. | We used it to flag the extra upfront duty that affects investment returns. We used it to remind readers this cost is separate from normal Victorian stamp duty. |
| SRO Victoria (Absentee Surcharge) | It's the official Victorian rulebook for the extra land tax foreign owners face. | We used it to include the ongoing annual surcharge that reduces net yield. We used it to build realistic after-cost estimates for foreign investors. |
| SRO Victoria (Short Stay Levy) | It's the official source for Victoria's 7.5% short-term rental levy. | We used it to quantify a key short-term rental cost that long-term leases avoid. We used it to compare long-term vs short-term profitability fairly. |
| Consumer Affairs Victoria | It's the Victorian government's practical guide to landlord and tenant rules. | We used it to explain how often you can raise rent and the notice required. We used it to show how regulation affects pricing power for landlords. |
| SQM Research (Rents) | SQM is a respected Australian property data provider with regular updates. | We used it to anchor current rent levels for houses and units in Melbourne. We used it to build monthly rent estimates that reflect the live market. |
| SQM Research (Prices) | It's a consistent, frequently updated view of asking prices for yield calculations. | We used it to estimate purchase prices for yield calculations in early 2026. We used it to avoid relying on a single median that may hide property differences. |
| Domain Rental Report | Domain is a major Australian property portal with established reporting methods. | We used it to cross-check rent levels and rental trend direction in Melbourne. We used it as a second data anchor so we're not relying on one source alone. |
| AirDNA | AirDNA is a widely used industry benchmark for Airbnb and Vrbo performance. | We used it to estimate occupancy and average daily rates for short-term rentals. We used it to compare long-term vs short-term returns using consistent metrics. |
| City of Melbourne | It's directly from the local council on short-stay policy and concentration data. | We used it to describe where short-term rentals are most concentrated in Melbourne. We used it to inform the saturation discussion with Melbourne-specific context. |
We have made this infographic to give you a quick and clear snapshot of the property market in Australia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
Related blog posts