Melbourne BtR Projects Grapple with Rental Reality Check

Many build-to-rent projects across Melbourne are asking hundreds of dollars a week more than renters will pay, threatening to undermine the sector’s rapid expansion as pricing strategies fail to match market reality. That’s the view of Infolio Property Advisors build-to-rent leasing strategist Nicole Hiddlestone, who says the disconnect between developer expectations and market reality has become widespread rather than isolated. Her concerns centre on projects launching with rents that bear little relation to what renters will actually pay, regardless of amenities on offer. “We’re seeing one-bedroom build-to-rent apartments in middle-ring suburbs asking $730 a week where the market will only sustain $550 a week rental for that product type,” Hiddlestone tells The Urban Developer . “The core issue is build-to-rent projects were initially priced using built-to-sell logic—square metre rates. That doesn’t reflect how a renter chooses an apartment.” ▲ Infolio Property Advisors build-to-rent leasing strategist Nicole Hiddlestone. In one inner-city project, leasing teams have struggled to fill apartments priced $300 to $400 a week above comparable market rates, according to sources familiar with the building’s performance. Supply surge reshapes competitive landscape The sector’s rapid expansion has intensified competition and given renters substantially more choice, which Hiddlestone says has shifted the pricing dynamic. Build-to-rent advisory Franklin Street’s review of the first quarter of 2025 showed 10,276 units operational nationally at the start of the year, with Melbourne absorbing more than 2000 units in its CBD fringe during 2024. The firm tracks more than 65,000 units in the national pipeline. Knight Frank’s third quarter 2025 update reported 6000 units completed during 2025 following a record 4660 in 2024. Charter Keck Cramer data shows build-to-rent delivered 3440 apartments in the 2025 financial year—around 53 per cent of total apartment supply—with Melbourne leading national delivery at 6160 additional apartments. ▲ Mirvac’s LIV Aston proves the viability of sustainable build-to-rent pricing with 6.4 per cent annual rent growth concentrated in one-bedroom units. While Hiddlestone says the booming market has matured faster than anticipated, “the pricing method has to mature as well”. “Your price when you put a project together three years ago will have evolved,” she says. “They’re no longer rare commodities. There’s more and more coming in.” Knight Frank’s third quarter 2025 report also reported rental growth had moderated significantly, falling from 19.2 per cent in 2024 to 4.8 per cent in the first half of 2025 as the market stabilised. Melbourne’s median weekly rent was around $604 in late 2025, with one-bedroom units in inner Melbourne typically commanding $550 to $575 a week in the traditional rental market. Misjudging what renters value Hiddlestone says that build-to-rent units can typically stretch about 10 per cent above standard market rates if amenities justify the premium. “But when you see heavy discounts and incentives very early on when a project first opens, it’s usually a sign that the rental pricing was unrealistic to begin with,” she says. “Renters know that.” The problem compounds when developers load projects with amenities that renters don’t value enough to justify premium pricing. Podcast studios, karaoke rooms and infrared saunas are features that fail to influence rental decisions. “A renter isn’t going to select your project over another one because it’s not an amenity that the majority will find improves their day-to-day life,” she says. Renters instead prioritise practical amenities such as parcel lockers, co-working spaces and outdoor areas for pets. Hiddlestone’s views are backed by Charter Keck Cramer research, which also shows that dog parks, pet washing facilities and co-working spaces have become essential for build-to-rent projects. ▲ Union Quarter prioritised practical amenities such as retail integration over podcast studios and infrared saunas. Union Quarter at Spotswood achieved strong leasing through integrated retail amenity rather than high-end lifestyle features. Instead of including gym facilities as part of the rental package, there is a gym in the associated retail precinct residents can access for an additional fee. Market dynamics shifted after the pandemic in ways that caught pricing models off guard. Many renters who upsized to two-bedroom apartments during lockdowns have since returned to one-bedroom units as affordability pressures mounted. “One-bedrooms we can rent every day of the week,” Hiddlestone says. “The two-bedrooms, two-bathrooms seem to be the stock or apartment type that is secondary preference.” Price sensitivity among renters has intensified significantly over the past eight to 10 months, leasing professionals report. Renters frequently tell agents that an extra $80 a week in rent could affect their ability to secure a car loan approval. Some developers have quietly converted portions of their build-to-rent stock to short-term rentals up to permitted limits to fill vacancies, according to industry sources. These units may be reported as contributing to improved occupancy rates while not delivering on the core build-to-rent promise of long-term, stable tenancies. Path to sustainable pricing Hiddlestone says unit-by-unit pricing strategies rather than blanket square metre rates will help build-to-rent projects stack up and stay competitive. “Renters pick apartments for liveability, the outlook, the floor plan, which floor, efficiency in their own lifestyle—not just the size of it,” she says. “You can’t use a traditional pricing model anymore.” Her advice for developers in planning or early construction stages focuses on accuracy over optimism. “Model it correctly upfront. You won’t need to discount it later,” she says. “Have the rental forecasting done floor plan by floor plan, not by square metre. Based on market rent plus a premium for build-to-rent, using current data.” ▲ Franklin Street head of advisory Ed Quinn says established build-to-rent projects are performing well while newer developments test rental pricing levels. Not all projects face pricing struggles, according to Franklin Street head of advisory Ed Quinn, who highlights two developments— LIV Aston and Novus Sturt St—where asking rents grew 6.4 per cent and 6.9 per cent year-on-year respectively, with the most growth concentrated in smaller unit types. "What’s driving demand for these assets is highly targeted rental locations in inner-city areas, along with institutional grade operations and well-provisioned assets designed for renters," Quinn tells The Urban Developer . These successes highlight pricing strategy as the key factor separating winners from strugglers. Quinn also says Melbourne typically experiences accelerated rental growth in the first quarter each year as students return, with some projects lifting asking rents around $30 a week between November and January. Hiddlestone has confidence in build-to-rent’s long-term potential provided the industry adjusts its approach. “The industry needs to shift to long-term rental performance project thinking,” she says. “It’s a long-term asset class, not short-term leasing.” The question facing the sector centres on whether current pricing assumptions will adjust to market realities before projects experience extended vacancies, Hiddlestone says. “Empty rooms are costing them money. Correct pricing is more effective than any incentive or discount strategy in any leasing strategy, every day of the week.”

Melbourne BtR Projects Grapple with Rental Reality Check

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