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Analysis shows tenancy reforms have limited impact on property investment

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Recent research by CoreLogic suggests that tenancy reforms, such as bans on ‘no grounds’ evictions, have limited impact on property investor activity compared to broader economic factors.

Eliza Owen, Head of Research Australia at CoreLogic, examined investor behavior following tenancy law changes in various states and territories.

“Dynamics in the rental market still seem overwhelmingly driven by broader economic and demographic factors of supply and demand, rather than tweaks to tenancy laws,” Ms Owen said.

The analysis shows that investor lending is more closely correlated with housing market returns and access to finance than with tenancy reforms.

For example, investor lending declined sharply following changes to lending rules by banking regulators, interest rate rises, and economic uncertainty during the pandemic.

In contrast, the announcement of ‘no grounds’ eviction bans in states like South Australia and the ACT had little discernible impact on investor activity.

Ms Owen noted that in South Australia, new investment property finance has increased by about 37% since rental reforms were announced in July 2023.

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The research also found that states with strong capital growth, like Western Australia, have seen increases in investor activity despite retaining ‘no grounds’ evictions.

“Prices in the rental market will continue to be dominated by demand factors such as population growth, household size and income, while the supply of investment property will be largely influenced by market conditions, such as capital growth prospects, availability of credit and interest rates,” Ms Owen said.

She concluded that while ending ‘no grounds’ evictions will improve security for tenants, it is unlikely to significantly impact investor activity or rent values.

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