‘Perfect storm’ of high vacancy, falling rent hurts investors
Key Points
- Investor wipeout is unlikely despite weak rentals, says AMP Capital's Shane Oliver.
- The highest proportion of stressed investors are in the Sydney and Melbourne CBDs.
- Units and apartments are more likely to cause financial stress than houses.
Soaring vacancies and widespread rental discounting have squeezed investors' cash flows to the extent that almost two in every five landlords are in a position of financial stress.
The closure of Australia's international borders in March that cut demand from tourists and international students has put CBD rentals under pressure and triggered a surge in vacancies, particularly in the Sydney and Brisbane CBDs, during April and May.
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