‘We’re over it’: Rattled investors cash out of Brisbane properties

Investors are fleeing the market in droves as the financial stress of meeting rising mortgage repayments worsens, only putting further pressure on the rental supply crisis.

Landlords are fleeing the market as the financial stress of meeting rising mortgage repayments worsens, only putting further pressure on the rental supply crisis.

The portion of investor-owned property sales across Queensland ballooned to nearly a third of all homes sold in June — jumping about 8 per cent in just one month to 29.5 per cent — higher than any other state, according to new research by PropTrack.

This three-bedroom house at 18 Wyeth Street, Wynnum, is on the market with a current rental income of $530 per week.

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The stats also show the share of landlords selling out of the market has been above 21 per cent since the introduction of land tax legislation — which was later repealed — in 2022, and indicate a surge in the share of rental homes since interest rate hikes began in May last year.

Industry experts say property investors are selling because they can no longer afford rising rates, increased management costs and new government regulations.

A three-bedroom unit in this complex at 7/1848 Logan Road, Upper Mount Gravatt, is advertised as an 'exceptional investment with 8% net return'.

Jett Jones of Ray White Marsden said she had three clients ring her this week looking to list their investment properties because “I quote unquote; ‘We’re over it’”. “Interest rates are too high,” she said.

Ms Jones said she had noticed an increase in the past month in landlords looking to list their properties with her — many of them long-term investors.

This one bedroom apartment at 55/30 Macrossan St, Brisbane CBD, is on the market as a 'high yield investment opportunity'.

PropTrack senior economist Paul Ryan said the data, which was based on investor-owned properties listed for rent and then sold on realestate.com.au, showed evidence that investors in Queensland were starting to respond to financial pressures by exiting the market.

“It’s starting to suggest, perhaps, now with interest rates increasing significantly... that financial pressures on investors, or even expected cash flow over the coming period, is pushing them to exit their investments,” Mr Ryan said.

Paul Ryan is a senior economist at PropTrack.

“What’s concerning is investor sentiment is very poor. Investors are a big pathway to building homes, and the long-term solution to the rental crisis. We need a really strong investor component in the market to facilitate new supply to come in.”

But Mr Ryan said there were signs of new investors coming into the market too, which might indicate most of the investors selling had held their properties for a longer period.

A two-bedroom unit at 11/62 Richmond Road, Morningside, is on the market with a rental income of $440 per week.

He said the influx of investor stock coming on to the market could also present good buying opportunities over the spring selling season.

“Because investors and owner occupiers often compete for the same properties, that could be a positive for buyers over the coming period,” he said.

The Queensland government implemented new legislation that came into effect on July 1 prohibiting landlords from increasing rent more than once a year.

This property at 42 Mortensen Road, Nerang, is on the market as a 'unique investment opportunity'.

Back in June 2022, it also introduced legislation that would calculate land tax based on an owner’s entire Australian property portfolio, rather than solely on properties held within Queensland.

That announcement triggered a strong backlash, prompting the government to abandon the proposed changes in September last year.

But MCG Quantity Surveyors managing director Mike Mortlock said the damage had already been done.

Mike Mortlock of MCG Quantity Surveyors.

“Our analysis focused on Queensland investment property purchases as a percentage of all Australian sales during the period before, during, and after the 98-day span when the changes were in effect,” Mr Mortlock said.

“Prior to the announcement, Queensland was the top destination for investors, accounting for a significant 40.9 per cent of all investment transactions. However, as soon as the changes were announced, that figure plummeted to 33.6 per cent.”

Mr Mortlock said government disincentives and negative sentiment towards property investors were forcing investors to sell up.

This block of units at 105 Beatrice Terrace, Ascot, is on the market as an 'unmissable investment opportunity'.

“If governments are really serious about the rental affordability issue, then they really need to consider a little bit more than long-term supply,” he said.

“We have a huge amount of property investors taking up the majority of the heavy lifting when it comes to providing rental accommodation who are seemingly disincentivised left, right, and centre.

“If they really want to fix the problem and move the needle, there needs to be more of a focus on the value that investors provide in providing that housing, rather than a disincentive.”

This five-bedroom house at 29 Harlen Road, Salisbury, is advertised as a 'Charming Dual Living Property with Exceptional Rental Return'.

InvestorKit head of research Arjun Paliwal said rental policies like the Queensland government’s rental capping legislation was making investing in the state less attractive.

“I wouldn’t say it’s had a massive impact just yet, but it’s also not helping people,” Mr Paliwal said. “It’s just kicking the can down the road.

“Queensland’s rental market remains extremely undersuppled and rents are likely to rise by double digits in the next 12 months, our data suggests.”

Arjun Paliwal, InvestorKit.

Mr Paliwal said the trend of investors selling may come down if interest rates stopped rising.

“Interest rates make people question their ‘line items’ at home,” he said, which were car loans, daily living costs, and investment properties.

“So, what people are doing is they’re looking at big chunks of ways to change their habits and finances, so they can keep their biggest asset, which is the roof over their head.”

Brisbane mortgage broker Glen Barnes of Barnes Finance Solutions said mortgage repayments now “far exceed” rent returns.

“Generally speaking, investment property holdings for some owners is now too much coupled with the mortgages on their principal places of residence and other general cost of living pressures,” Mr Barnes said.

“Current interest rate levels are the new norm, which will build pressure on some back pockets.”

Apollo Investment director Nic Alessio said he had noticed an increase in the number of investors selling traditional investment properties and instead investing in National Disability Insurance Scheme (NDIS) properties, which generated higher returns.

Mr Alessio said lending inquiries for general investment properties was down nearly 50 per cent.

“With so many people needing NDIS properties, they are now one of the most sought-after forms of property investment because of their social benefits and investment returns,” Mr Alessio said.

“In my view, NDIS housing is providing a once in a lifetime opportunity for mum and dad investors to create generational wealth.”

Brisbane Rooming Houses director Paul Zanetti said rooming houses were being viewed by the big banks as an affordable housing asset now that the rental crisis had changed people’s perceptions of them.

Bur Mr Zanetti said many investors were discouraged from investing in rooming accommodation because of state government red tape.

“The Queensland state government and Queensland local governments (except Brisbane City Council) are putting up road blocks to more rental accommodation,” Mr Zanetti said.

“They are charging $88,000 in infrastructure charges to anyone who wants to rent a room in a house.

“This discourages and penalises anybody who wants to rent out a room — or forces the homeowner to rent rooms illegally, so will negate their insurance (which most homeowners do not know).”