Property Owners in Melbourne: When to Get a Rental Appraisal?

For property owners in Melbourne, it’s easy to fall into the habit of setting rent once and forgetting about it, especially if your tenants are long-term and your property stays occupied. However, without regular rental appraisals, you risk undercharging your tenants, or missing important signals in a shifting market.

In this guide, our experts at Melcorp Real Estate will break down the key signals it’s time for a rental appraisal, explain the benefits of getting one, and walk you through what to expect.

Benefits of Rental Appraisal in Melbourne

A rental appraisal provides an up-to-date estimate of what your property could earn on the current rental market, based on real-time data, comparable listings, and the condition and features of your property.

Here are the key benefits:

• Set the Right Rent: Ensure your asking price aligns with current market conditions, reducing vacancy risk and maximising income.
• Support Lease Renewals: Use current data to justify rent increases and maintain transparent tenant relationships.
• Strengthen Loan Applications: Updated rental estimates support refinancing or loan approvals by demonstrating your property’s earning potential.
• Benchmark Portfolio Performance: For landlords with multiple properties, appraisals help compare rental performance and identify opportunities for growth.
• Stay Ahead of Market Shifts: A rental appraisal reflects local trends, allowing you to adapt to Melbourne’s evolving property landscape.

When Should You Get a Rental Appraisal?

In Melbourne, where rental market dynamics can shift rapidly, knowing when to reassess your rental is key. Here are the key moments when getting a rental appraisal is not just helpful but essential.

1. Before leasing out your property for the first time

Without clearly benchmarking your property against the current market, you risk mispricing either overestimating (leading to long vacancies) or undercharging (resulting in lost income from day one).

It’s also important to remember that Melbourne’s rental landscape is highly localised. A one-bedroom apartment in Southbank may command significantly more than a comparable property in the outer suburbs, simply due to proximity to amenities, transport, or university zones.

A professional rental appraisal benchmarks your property against similar recent listings and leases in your specific area, not the general market, giving you a competitive, accurate price.

2. When your lease is up for renewal

When dealing with long-term tenants, it’s easy to let rent roll over unchanged for years. But even modest shifts in the market can result in a growing gap between what you’re charging and what your property is actually worth.

In fact, Domain’s June 2024 Rent Report showed a 1.8% increase in Melbourne house rents in just one quarter, and an 11.5% annual increase, the slowest it’s been since 2021. Without periodic rent appraisals, it can be easy for you to fall behind.

Additionally, getting professional rental appraisal from reliable real estate companies like Melcorp Real Estate allows you to support any proposed rent changes with solid data. This helps you protect your return and makes conversations with tenants fairer and more transparent.

3. After renovating or upgrading the property

Improvements to your property, such as updating kitchens and bathrooms, adding climate control, or refreshing flooring, should translate into increased rental value. But unless you reassess your rent after those upgrades, the return on that investment may never materialise.

A rental appraisal looks at how your renovated property compares to other similar listings in the area. They’ll also consider the added value of your renovations. In some cases, even minor cosmetic improvements can bump weekly rent by $20–$40, especially in design-conscious areas like Fitzroy, Richmond, or South Yarra.

4. When the local rental market changes

Even if your property hasn’t changed, the market around it almost certainly has. Melbourne’s rental trends are constantly shifting driven by economic factors, infrastructure developments, population growth, and supply dynamics. 

For instance, Victoria is currently Australia’s fastest-growing mainland state, dating back to March 2024, with net overseas migration of around 133,000 people in the 2023–24 financial year alone. Much of this growth is concentrated in Melbourne’s inner and middle-ring suburbs, particularly Carlton, Clayton, and Footscray, which also experience a surge in student and young-professional demand.

How to know if market trends are shifting?

• More listings or fewer listings in your area than usual
• Changes in the speed at which properties are being leased
• Higher tenant enquiry volumes
• Media coverage of infrastructure projects or migration surges
• An uptick in demand or comparable rent adjustments

5. If you haven’t updated rent in over a year

If your rent hasn’t been reviewed in over 12 months, your property may be underperforming, even if your tenants are excellent. 

A $10–20 weekly shortfall might not sound like much, but across the course of a year, or across a small portfolio, it can represent thousands in lost income.

With Melbourne’s current vacancy rate tightening and rental prices trending upward year-on-year, letting your rental pricing drift too far from market value risks slowly eroding your yield.

6. Before refinancing or applying for a loan

Banks and lenders want a realistic picture of your property’s income potential. If you’re refinancing, buying another investment, or negotiating new loan terms, a current rental appraisal can strengthen your position.

They are particularly valuable when combined with a property’s historical rental performance, helping lenders assess the property’s stability and future value.

7. When preparing to sell an investment property

If you’re selling your investment, a current rental appraisal can become part of your marketing strategy, especially if you’re targeting investors.

A clear, well-documented rent estimate not only reassures prospective buyers of the property’s income potential, but can also highlight opportunities to improve that income post-purchase (e.g., with minor upgrades or lease restructuring).

8. During a portfolio review

For investors managing more than one property, rental appraisals are a key part of performance benchmarking. If one property consistently lags in yield or tenant turnover, a fresh appraisal can help uncover why and what to do about it.

This becomes especially important in Melbourne’s fragmented market, where performance varies significantly across suburbs. An appraisal-led review gives you the insights needed to decide whether to renovate, increase rent, or consider selling and reallocating capital elsewhere.

What to Expect During a Rental Appraisal

A rental appraisal is a quick, professional process that gives you a realistic estimate of what your property could earn in today’s market. It’s not a formal valuation but rather a data-informed assessment of rental potential based on location, property condition, and demand.

Here’s what’s typically involved:

A thorough property assessment

Your property manager or licensed real estate professional will conduct a walk-through inspection either in person or, if tenanted, based on detailed property records and recent photos. They’ll assess:

• The number of bedrooms and bathrooms
• Property condition and presentation
• Fixtures, fittings, and recent upgrades
• Natural light, outdoor areas, parking, and storage
• Overall appeal to likely tenants (e.g. students, families, professionals)

In some cases, access may not be required, especially if the agency already manages the property and holds updated records.

Comparative market analysis

Using recent data, your agent compares your property with similar rentals in your suburb. This includes current asking rents, recently leased properties, and trends in tenant demand which is particularly important in fast-moving areas like Southbank or Carlton.

Tailored rental recommendation

At the end of the process, you’ll receive a recommended rental range, usually with a low-to-high bracket that accounts for condition, presentation, and market activity. You may also receive advice or recommendations on minor improvements that could justify a rent increase, timing considerations, and even tenant demographics currently driving demand in your area. 

Supporting documentation

Some appraisals, particularly those requested for refinancing or pre-sale purposes, will be delivered as formal written reports. These may include:

• A breakdown of recent comparable rentals
• Notes on property features
• Photos (if applicable)
• A valuation-style summary of recommended rent

For casual appraisals, your property manager may provide this via email or in conversation, but you can always request a formal document, especially when engaging banks or prospective buyers.

Ready to Maximise Your Investment? Let’s Talk.

With the right timing and market insight, a rental appraisal can uncover hidden earning potential and help you make sharper, more strategic decisions.

Contact us now and speak with Melcorp’s rental experts today to discover how your property compares in today’s Melbourne market.