Renters in Melbourne, Australia are being forced into bidding wars so they can get a place to live. The lowest rental vacancy rates in a decade, combined with rising interest rates, means people are bidding up to $300 a month over the asking price for houses and apartments.  Amazing photos.

Where six months ago rental inspections were attracting 10 or 20 people, 100 now turn up, say real estate agents.

"Tenants are regularly told that putting in a bid of $20 or $30 (a week) more will get them the property — that’s quite a regular situation. One tenant has offered $80 more," said Tenants Union policy officer David Imber. The union had been flooded with complaints.

The Real Estate Institute of Victoria said it was aware bidding wars were taking place, and warned agents that they were breaking the law by encouraging tenants to offer higher rent than advertised.

"We are a bit concerned about this. I’ve heard of a number of incidents where people have been asked to put in a higher bid to secure the property," said REIV chief Enzo Raimondo. " If a property is for rent at a certain amount, the most appropriate person prepared to pay that rent should end up in the property."

The Tenants Union said there was a worrying trend for agents to use price ranges, advertising a property as between $50 and $100, for example. "That in itself is a bit like a bidding system," Mr Imber said.

Agents who encourage tenants to submit a higher rental price for a property than advertised can be fined under the Fair Trading Act.

In the year to March, Consumer Affairs Victoria reported almost 1000 complaints against real estate agents, many for false and misleading advertising. No agent has yet been fined for misleading a tenant.

Melbourne’s rental housing vacancy rate is now at 1.8 per cent, according to the REIV. In the past year the cost of renting has increased by an average 5 per cent in Melbourne. In the past six months investors appear to have abandoned the housing market, leaving renters with spiralling prices as fewer properties are available.

Sam Herszberg from RUN Property, which manages 12,000 properties across the city, said the practice of paying above the asking price was becoming commonplace.

"At a house in Richmond last month, we had 47 people rock up to an inspection where we were asking $405 a week. We ended up renting it for $440 a week. There has been a few of those." It was the first time this sort of bidding had happened in Melbourne’s rental market, he said.

Adrian Burrage, Melbourne University’s housing officer, said he had never known the rental market so tight: "Students are cramming five people into a two-bedroom house."

During the housing boom of 2001-04, there was double the amount of property on the rental market, according to the Office of Housing.

The rental shortage is placing stress on social and public housing. Chief executive of Hanover Welfare Services Tony Keenan said: "People are being forced into rooming houses or caravan parks. And then the crisis just rears up again."


Brighton $565

Prahran $430

Camberwell $420

Hampton $395

Williamstown $380


Melton $185

Dromana $185

St Albans $185

Sunshine $190

Dandenong $200

Source: The Rental Report, Office of Housing, April 2006. Amounts show weekly rate.