Victoria's apartment-sector rent caps took effect in September. Six months in, agents interviewed for this piece describe a market that feels different from a year ago.

What the caps do

The caps limit annual rent increases on apartments in a specified set of postcodes to CPI plus one per cent. The measure is time-limited to twenty-four months and applies only to the postcodes named in the regulation.

What the agents say

The immediate effect has been to shift negotiation power slightly toward existing tenants. Landlords, faced with a capped rent, have in most cases chosen to renew rather than accept vacancy risk. The vacancy rate on capped apartments has fallen; the average lease duration has extended.

What is likely to follow

Two things worry agents. First, that landlords will exit the rental market at the end of leases, converting properties to owner-occupied stock or selling them. Second, that new construction of investor-oriented apartments will slow. Both effects are being watched.