41,000 Victorian ex-rentals listed for sale in last 12 months: Suburbtrends

More than 100 Victorian areas have had landlords behind a worryingly high number of residential home sales.

Sarah Petty

3 min read

July 15, 2024 - 4:05PM

National News Network

115 Sayers Rd, Williams Landing can be leased for $590 a week.

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Landlords are selling up in droves across Victoria with more than 41,000 rentals offloaded in the past financial year.

Williams Landing was home to the state’s highest share of investment property sales, with 112 homes previously available to tenants among the 296 total sales, or about 38 per cent.

South Yarra was home to the next greatest share of ex-rental sales at 37 per cent, with as much as 732 of its former rentals sold and potentially no longer available to tenants.

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Hawthorn East was next at 36 per cent, followed by Albert Park, 35 per cent.

The figures from Suburbtrends track sales listings in the 12 months to June 30 and found 105 Victorian areas of 262 assessed had landlords behind at least 20 per cent of their sales from Aspendale to Coolaroo.

It comes after PropTrack revealed Victoria’s rental vacancy rate in June was just 1.47 per cent — a healthy market usually has 3-4 per cent of properties to lease available.

Suburbtrends founder Kent Lardner said the landlord exodus meant the loss of critical rental stock at a time when more housing was urgently needed.

“We need the rental pool to be expanding, not getting smaller,” Mr Lardner said.

111/55 Islington St, Collingwood is listed for rent.

The two-bedroom apartment can be leased for $620 a week.

He said soaring mortgage costs were the main driver of increased investor sales in many markets.

“It’s a survival strategy; it comes down to cost of living pressures. Negative gearing makes sense if your investments are profitable, but it becomes a lot less attractive when you’re digging deep into your own pocket each month to pay for an investment,” he said.

“Investors who bought three or four years ago are the ones most reactive to rate hikes. Many didn’t plan for this level of interest rate.”

Mr Lardner added that the reality was that there was a rent crisis because there hadn’t been enough housing built and landlords were actually struggling.

“We had the solution 40 to 50 years ago, which was social housing, but we turned our back on it,” he said.

“We have to accept that the private landlord market has delivered us unaffordable housing.”

Property Investment Professionals of Australia (PIPA) chair Nicola McDougall said the number one issue that investors have had with the Victorian market was the new land tax regime which had added thousands of dollars in costs to investors.

But Ms McDougall said the investment fundamentals for Melbourne were still very strong as Australia’s most popular city and the “economic powerhouse” of the nation.

“However, in a time where mortgage repayments have skyrocketed, many investors perhaps just (aren’t) financially able to hold on to those properties,” she said.

“They can’t manage their increased mortgage repayments, and in a time where they feel that the Victorian Government is treating them very poorly with myriad anti-investor policies, they have decided that’s enough.”

15 Kyabram St, Coolaroo is listed for rent.

The three-bedroom house can be leased for $520 a week.

BigginScott Wyndham City managing director Sam Arora said there was an influx of investors who purchased homes in Williams Landing in about 2014, but since land taxes have increased, many had decided to sell.

Mr Arora said about 70 per cent of the homes listed for sale at his agency were investment properties at the moment.

Tenants Victoria director of community engagement Farah Farouque said the reality was that the “churn” of rental property, or buying and selling by landlords for investment reasons, was a built-in feature of Australia’s market-based rental system.

“Around nine in 10 households rent privately-owned housing because compared with many other countries we don’t have much social housing, which is owned and operated by government or charities,” Ms Farouque said.

“There is no doubt we need more supply of rental homes, and we need to urgently build more social housing in our state because it offers greater security for renters on lower incomes.”