Investors abandon rental market amid rising costs and new taxes
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A new survey reveals investors are selling off rental properties at an increasing rate, sparking concerns of a tighter rental market across Australia.
The 2024 PIPA Annual Investor Sentiment Survey found that 14.1% of respondents sold at least one investment property in the past year, up from 12.1% last year.
PIPA Chair Nicola McDougall said, “These properties are predominantly being purchased by homebuyers, which means fewer and fewer rental properties are available to lease by tenants.”
The survey showed that 65% of sold rental properties were bought by homeowners rather than investors.
Ms McDougall explained, “When rental properties are bought by existing homeowners then those properties are removed from the rental pool, thus reducing overall supply.”
Higher holding and compliance costs, as well as new property taxes, were cited as key factors driving investors out of the market.
Brisbane experienced the highest percentage of investor sales over the past year at 26%, followed by Melbourne at 21.7% and Sydney at 14.9%.
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At the state level, Queensland saw the most investor sales at 33.4%, followed closely by Victoria at 31% and NSW at 25.4%.
Ms McDougall attributed the high volume of sales in Queensland to strong market conditions, while noting that NSW and Victoria had introduced “anti-investor rental reforms and new property taxes” over the same period.
Of those who sold, nearly 65% had held their properties for less than 10 years, with almost one in five selling within three years of purchase.
The survey also found that fewer investors are looking to buy, with only 45% believing it is a good time to invest in residential property, down from 55% last year.
Investors reported significant increases in holding costs, with over 70% paying between $10,000 and $60,000 in additional mortgage interest annually compared to pandemic-era rates.
Ms McDougall warned that continued government interference in the rental market could lead to further rent increases, as investors attempt to offset rising costs.
The PIPA survey, conducted in August, gathered responses from 1,288 investors nationwide.