Where landlords are selling up – and why

September 1, 2023

Interest rate rises, land tax increases and the opportunity to bank big price gains is driving a spike in landlord exits from the property market across Australia.

Victoria topped the list for the highest share of investment properties sold in July, with latest PropTrack figures revealing 30.1% of sales were properties which had been listed for rent since they were purchased.

That’s up from 24.7% in July 2022, and 16.9% in July 2019, before the pandemic.

New South Wales followed at 28%, which like Victoria, was also the state’s highest share of investment home sales since late 2018.

Ranking third was Queensland, where 27.15% of sales in July were rental properties.


McGrath Coburg and Brunswick principal Michael Chan says interest rate rises and planned increases to land tax in Victoria meant many investors could no longer afford an investment property in addition to their principal place of residence.

From 1 January 2024, Victoria will slash the tax-free threshold for land tax from $300,000 to $50,000 in an effort to rebalance Victoria’s coffers after Covid. Land tax only applies to investment and secondary properties.

“Since the introduction of the Covid debt levy, we’ve witnessed a sudden increase in the number of investors considering offloading investment properties – which will ultimately exacerbate the state’s rental stress,” he said.

“These investors have stated a lack of incentives for investors to be a contributing factor prompting them to revaluate their options.”

Agents say planned changes to land tax in Victoria has prompted many investors to sell up. Picture: Getty

Baby boomers approaching retirement were also reevaluating their options, Mr Chan said, and were deciding whether or not it was more financially viable to sell their existing investment properties and either reinvest elsewhere, or cash-up.

Jim Cross, principal at McGrath Geelong says a portion of long-term investment properties have recently come onto the market.

“Those properties require substantial capital expenditure to bring them up to the new living standards,” he said.

“Some landlords are choosing to capitalise on the equity they hold in those properties by selling them.

“Investors holding older properties that require maintenance are selling them and then getting back into the market to purchase new properties to access better tax benefits and lower maintenance costs.”

PropTrack senior economist Paul Ryan says the trend of landlords offloading investment properties emerged at the start of the pandemic.

“Initially, I think there was a lot of uncertainty about investors’ own jobs, and uncertainty about borders closing and demand for rental properties,” he said.

“As the pandemic progressed and the rental market got tighter – and obviously home prices increased quite significantly – I think a lot of investors themselves were moving to bigger homes and needed the equity, and prices were up significantly, so it seemed like a good time to sell property.”

City of Sydney cityscape skyline - aerial view from Inner city Surry Hills suburb on a sunny day.

Many property investors have made large capital gains on their properties, and are selling to fund retirement. Picture: Getty

However, during the past few months there has been a higher rate of investor sales making up a larger proportion of market activity, Mr Ryan said.

“That may start to signal that there is some emerging financial pressures from higher interest rates,” he said, noting loan arrears still remain very low.

“Households are still spending quite strongly – really the big signal for financial stresses is around the labour market in terms of having employment and that still remains very, very strong.”

Data from the Australian Bureau of Statistics on Thursday showed the unemployment rate edged up 0.2 percentage points to 3.7% in July, with around 172,000 fewer unemployed people than before the pandemic.

Richard Mirosch, LJ Hooker Stafford principal, says in Queensland, more investors were now choosing to sell but the decision is not solely driven by interest rates.

“Certainly, there have been some investors who bought against the backdrop of very low interest rates and they haven’t been able to refinance as the cash rate has gone up,” he said.

“In addition to that, some long-time investors haven’t received the legislative changes well, which places limits on the frequency in which landlords can review rents.

“Some investors just don’t like having more rules put on them around how they can operate their investments and are deciding to put their money elsewhere.”

“Window of opportunity” next year

Buyers advocate and propertybuyer.com.au chief executive officer Rich Harvey says in Sydney, more investment apartments were currently being listed for sale.

“They tend to underperform compared to houses,” he said. “Higher holding costs, interest rates are pushing people beyond the brink of mortgage stress to significant pain…and I think people are going, ‘Is it worthwhile holding this property?’”

Higher interest rates have weighed on investment returns, even as rents rise. Picture: realestate.com.au

However, Mr Harvey said a short window of opportunity was ahead for property investors.

“Between September and March next year, it’s going to be peak economic pain for a lot of people but for me, that’s the best time to buy,” he said.

“If you’re a smart investor and you’ve got the income and you’ve got the borrowing capacity, even though interest rates will be higher, they’re not that high compared to what they were 10 years ago.

“We’ve been used to these really cheap rates for too long. I think, definitely, there’ll be some really good opportunities because there will be more stock and there will be more motivated vendors.”

There are early signs investors are either entering or returning to the market with ABS data showing new investment property loans picked up for a third straight month in June, although still remain 15% lower year on year.

Looking ahead, with interest rate cuts forecast for next year, coupled with rising rents, Mr Ryan expects investors will begin to feel more confident returning to the market in 2024.

“I think a lot of the uncertainty we had last year about just how high interest rates would go was one of the things that weighed on market activity and now, while we’re seeing interest rates increase, there is much more certainty about where housing costs will be later this year and into next year,” he said.

“So I think people are pretty confident that while we may not be at the peak of rates, we are close, so if you are a new investor, or even a homebuyer, you can at least do your numbers and do your budget and see how it stacks up.

“Which compares much better from a certainty perspective than last year when you didn’t know where you were going to be in 12 months.”

Source: realestate.com


You might be also interested in

Gettyimages 1421414511
PropTrack Property Market Outlook – June 2024
At the end of 2023 there had been a noticeable deceleration of home price growth. At the time, interest rates had just increased but were expected to have reached their
PropTrack Home Price Index – June 2024
The PropTrack Home Price Index shows national home prices lifted 0.18% to a new peak in June, despite recording the slowest pace of monthly growth since December 2022. With housing
Investors who ignore construction costs leave money with the ATO
Many of Australia’s 2.2 million residential real estate investors are missing out on thousands of dollars each year by failing to maximise one key tax break. Depreciation deductions – for
Tax time 2024: Top tips for investors and business owners
Investors and small business owners have less than a fortnight to make smart and powerful money moves in the next fortnight if they want maximise their tax refund for 2023-24.
Legal Management 1600x1080
Stay Compliant with the Latest Property Management Laws
Navigating the complexities of property management laws and regulations can be challenging, but staying informed and compliant is crucial to protecting your investment. At Motion Property, we keep our clients
What Is Real Estate Accounting 1600x1080
Unlock the Power of Financial Reporting with Motion Property
Effective property management goes beyond maintaining the physical condition of your property and ensuring timely rent collection. At Motion Property, we believe that comprehensive financial reporting is a cornerstone of
Myths Cox Co 1600x1080
Debunking Common Property Management Myths
At Motion Property, we understand that choosing a property management service is a significant decision. Many myths can create misconceptions about property management, and we’re here to set the record
End of Financial Year Tips for Landlords
As the end of the financial year (EOFY) approaches, it’s crucial for property investors to get their affairs in order. Here are some essential steps and tips to help you
New data shows solution to the housing crisis is working – but slowly
The housing crisis continues to put pressure on many Australians, particularly renters, with typical rents up 9.1% over the past year.   But new data on construction across the country
Paying Bills Scaled
The sacrifices Australians are making to meet home loan repayments
New data has revealed that four out of five borrowers have had to tighten their budgets to keep up with home loan repayments as a result of high interest rates.

Get your Free Property Guide.

Here goes your text ... Select any part of your text to access the formatting toolbar.

Get your free Sales Report for Where landlords are selling up – and why

Get your free Sales Report for Where landlords are selling up – and why

Subscribe to hear the latest

Start The Conversation Today.

Call us on:

1300 850 730

Request a Callback:

Send us a Message:

Privacy Policy

Get your Free Property Guide

Get your free Suburb Report for Where landlords are selling up – and why

Privacy Policy

Who we are

Suggested text: Our website address is: https://motionproperty.com.au.


Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection.

An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.


Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.


Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year.

If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser.

When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select “Remember Me”, your login will persist for two weeks. If you log out of your account, the login cookies will be removed.

If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.

These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue.

For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where your data is sent

Suggested text: Visitor comments may be checked through an automated spam detection service.

Get your Free PDF copy of Make Money Simple Again