Renters are set to take a hit with investors bailing on rentals in areas where costs and red tape are starting to bite, with surprise revelations of what they’re eyeing next.
Property Investment Professionals Australia chair Nicola McDougall said at least 14 per cent of investors in their annual investor sentiment survey – out Friday – had bailed on their rentals in the past year, an even bigger sell-off rate than the year before.
“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.
Property Investment Professionals of Australia chair Nicola McDougall said some were bailing due to rising costs. Picture: John Gass
The issue is set to impact renters hard because 65 per cent of all rentals sold were snapped up by owner occupiers looking to move in, PIPA found, rather than other investors seeking to keep renting it out – shrinking the rental pool further.
The survey found a massive 42.7 per cent of investors were now seeing tight cashflow, while one in 10 were dipping into savings to cover shortfalls.
Seventy per cent of investors were seeing rises of $10,000 to $60,000 annually in mortgage repayments costs now compared to the pandemic, the survey found.
A third were also facing an 11 to 20 per cent rise in expenses in the past year alone including higher land taxes, compliance and minimum standards improvements, property insurance, and property management fees. One in five (21pc) said their expenses jumped 21 to 41pc and 5 per cent were seeing unsustainable rises of 41 to 60pc.
The biggest selloffs were in Brisbane where one in four investors surveyed let a property go (26 per cent, up 3.3pp), followed by one in five in Melbourne (21.7pc), Sydney 14.9pc, 4 per cent in Adelaide, 4pc in Perth, and 1 per cent each in Darwin and Canberra.
Added to regional data – NSW (10.5pc), Victoria (9.32pc), Qld (7.4pc) – the most investor sales in the past year came out of Queensland 33.4pc, Victoria 31pc, and NSW 25.4pc.
Western Australia was ranked as the most pro-property investment state in the country, followed by Northern Territory, with the most anti-property investment being Victoria followed by 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.
Source: realestate.com.au
