Landlords are selling, and here’s why.

Investors are jumping out of the market at higher rates since the advent of covid. Unsurprisingly, Victoria is leading the way with 30.1% of sales in July 2023 being rental properties – a sharp increase from the same time last year and well above the 16.9% experienced in July 2019.  

NSW and Queensland weren’t that far behind with 28% and 27.2% respectively. And numbers were lower across the rest of the country, but still above pre-pandemic levels.

So why the sell off, given property investment is seen as the ticket to riches, early retirement and tax breaks?

1) In Victoria, the impact of the reduction of the land tax-free threshold from $300,000 to $50,000 is driving some of the sell-off.

2) However, nation-wide, the impact of higher interest rates is also influencing investor decision making. Properties were bought at lower rates, but now the increased monthly repayments may be biting into their yield.

3) Uncertainty across the economy may also be having an impact. Economic growth has slowed considerably in recent quarters, and employment has ticked up slightly. Recently, a survey of insolvency professionals has 70% forecasting a recession in the next 12-months, so there may be a period of consolidation amongst investors as they hunker down to see if the economy stabilises and what the RBA’s next moves will be.

4) Furthermore, the resilience in property prices post the lockdown era may have led to investors locking in their capital gains and seeking other avenues of investment or reducing other debt to free up cash in their budgets.

The daily papers and political parties talk often and loudly of the rental crisis, and with investors selling at higher rates, there is no end in sight. On the flip side, investors selling may free up stock for home buyers trying to get out of rentals. But supply is still low, and political parties are not acting quickly enough to address this in the short term.

If you’re seeking to make sound property investment decisions, so you don’t find yourself selling rather than building a portfolio, I can help. I have access to property investment specialists who can take the guess work and leg work out of finding your next investment. I can also find the best investment loan for your needs from our panel of 35 lenders.

 Contact me if you want to chat, or book a home loan strategy session today.