A rental listing in inner Melbourne is offering capsules that contain just a single bed for up to $900 a month.
The Abbotsford house, which is advertised privately, offers traditional rooms for $400 a week or $1500 a month, or the single pod capsules for up to $250 a week or $900 a month.
The six capsules are stacked on top of each other in a downstairs room of the house, while the three traditional bedrooms are upstairs.
The house is advertised as sleeping 12 people and currently, all the pods are full.
“The boarding house and the capsules are fully licensed,” the advertisement, posted to Facebook reads.
“Each capsule pod fits a single bed (can sleep one person only), equipped with own mirror, ventilating fan, USB ports, digital control panels, adjustable colour reading lights, safe locker, clothes hanger & curtain door for privacy.
“They look like space shuttles.”
Landlord Frank Chan said the pods were only intended as short-term rentals. But Guardian Australia understand the house is used to host anyone from backpackers staying for a few nights, to people who stay up to six months in the pods.
Chan said rising inflation and a reduction in the number of short-term travellers had contributed to rising costs.
“I do not charge bond, no electricity charge, provide full furniture, full-time housekeeper, tenants have full flexibility when they want to leave, and my price is cheaper than 95% of comparable listings in booking.com, hotels.com and Airbnb the like,” he told Guardian Australia.
“I know there are many people who don’t understand much about the rental market and shout that my price is too high … but they really haven’t looked at how short-term accommodation functions.”
Chan said pods could be a “solution” to the tight rental market.
“I hope local councils can make it easier for landlords to install them,” he said. “At the moment it’s quite hard to make it happen, I am the only pod provider in Melbourne.”
Guardian Australia understands the Yarra council is aware of the sleeping pods and conducted inspection of the Abbotsford property in October last year. The property was found to be compliant and the pods were deemed appropriate under the regulations.
The rental market is getting tighter throughout Australia.
In the Melbourne suburb of Princess Hill – just nine minutes away from the pod house in Abbotsford – an advertisement for a single room in a five-person share house received 42 applications. That’s double the number of applications received for a similar room advertised two months ago, one of the renters, who did not want to be identified, said.
Tim Lawless, a research director at CoreLogic, said vacancy rates in Australia’s capital cities were on average 1.3%, and in regional areas about 1%.
“Which is pretty much record lows,” Lawless said. “Normally, you look for things like overseas migration to push up rents, but this current rental crisis is coming at a time when mostly the international border has been closed, so this is about domestic rental demand.”
There are two reasons for this: there are fewer rental properties as investors took rentals off the market during the pandemic; and renters are moving to bigger homes as they look for more space.
With a tighter market comes higher rent. Rents have risen 9.2% over the past 12 months and 9.5% for units, Lawless said.
“It’s the highest annual growth rate for rents on record,” he said. “The last time we saw it on this level was in 2017, but that was with a record level of migration. This time around, this level of rental growth is happening amidst closed borders.”