Investors bailing
Property sell-off: Investors bailing on rentals in shock new move
Renters are expected to face challenges as investors pull out of the rental market due to rising costs and increasing regulatory hurdles. According to Nicola McDougall, chair of Property Investment Professionals Australia, 14 per cent of investors, as revealed in their annual investor sentiment survey—set for release on Friday—have sold their rental properties in the past year. This represents a larger sell-off rate compared to the previous year.
“It’s clear that investors have not only had enough of being the golden gooses to financially fluff up state government bottom lines, but they also are reacting to the myriad rental reforms and property taxes that make holding an investment property either unpalatable or unviable for them,” Ms McDougall said.
The issue is set to hit renters hard as 65 per cent of all rental properties sold were bought by owner-occupiers rather than investors, shrinking the rental pool, according to PIPA.
The survey also found that 42.7 per cent of investors are now experiencing tight cash flow, with one in 10 using savings to cover shortfalls.
Seventy per cent of investors have seen annual mortgage repayments increase by $10,000 to $60,000 compared to during the pandemic.
A third of investors faced an 11-20 per cent rise in expenses over the past year, including higher land taxes, compliance costs, property insurance, and management fees. Meanwhile, 21 per cent reported expenses rising 21-41 per cent, and 5 per cent faced increases of 41-60 per cent.
The biggest sell-offs were in Brisbane (26 per cent), Melbourne (21.7 per cent), Sydney (14.9 per cent), with smaller percentages in Adelaide, Perth, Darwin, and Canberra.
Including regional data—NSW (10.5 per cent), Victoria (9.32 per cent), and QLD (7.4 per cent)—Queensland led investor sales at 33.4 per cent, followed by Victoria at 31 per cent, and NSW at 25.4 per cent.
Western Australia was ranked as the most pro-property investment state in the country, followed by the Northern Territory, with the most anti-property investment being Victoria, followed by the Australian Capital Territory.
When asked where did you sell, this was the response – Darwin was 1pc.
Ms McDougall said “the strong market conditions in the Sunshine State over the past year can partly explain its high volume of investor sales”.
But she added the explanation for southern capitals was not the same: “New South Wales and Victorian Governments have introduced a plethora of anti-investor rental reforms and new property taxes over the same period”.
The worst rating by landlords was for Victoria described as “the least accommodating state or territory for property investors in the nation, followed by the ACT, and NSW, which were all seen as being anti-property investment”.
But Ms McDougall said savvy investors were also seeing a silver lining in Melbourne, eyeing it as having “excellent future capital growth – even though its market has been the most depressed of any capital city in the nation over the past year”.
Victoria the worst for investors but there was also a surprise in the findings below.
Surprising results in the 2024 PIPA Annual Investor Survey released Friday.
The top picks for “best place to invest right now” were Melbourne (26.2pc) followed by Perth (25.1pc) and Brisbane (17.8pc), with regional Queensland still considered the best regional market to invest in.
“Last year, investors indicated that Perth was the capital city with the best investment prospects – and they were right with property prices in the Western Australian capital the city market leader over the past year,” Ms McDougall said.
“Brisbane’s third placing in this year’s survey is its worst for many years, especially considering some 57pc of respondents placed it as the most investment-worthy back in 2021.”
Of investors who sold in the past year, 65 per cent had their properties for less than a decade and one in five sold up within three years.