Research shows Australia needs 35,000 more property investors to ease rental crisis

Australia faces a critical shortage of property investors, with research showing 35,000 additional investors are needed to address the nation’s rental crisis.

A joint study by the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) revealed the shortfall has developed over the past five years.

Population growth of 1.8 million people between March 2019 and March 2024 created demand for 212,000 new rental properties requiring 145,000 investors.

“From 2003 to 2017, the number of individual property investors grew steadily, with annual increases ranging from 56,000 to 60,000,” PIPA Chair Nicola McDougall said.

Australian Taxation Office data shows only 110,000 additional property investors entered the market in the five years to 2022, falling well short of demand.

Annual investor growth averaged just 22,300 during this period – a 60 per cent decline compared to the long-term average.

PICA Chair Ben Kingsley said the declining investor numbers have directly impacted rental availability.

“Between 2015 and 2017, when investor growth was steady, the national vacancy rate was around three per cent, with 70,000 to 80,000 rental vacancies available nationwide,” he said.

The national vacancy rate dropped to 1.2 per cent in October 2024, with only about 36,000 properties available.

The 2024 PIPA Annual Investor Sentiment Survey found more investors sold properties in the year to August compared to the previous year.

About 65 per cent of these former rental properties were purchased by homeowners rather than investors, further reducing rental stock.

Kingsley said governments should encourage rather than discourage property investment to help address the rental shortage.