Victorian landlords exit state in massive numbers as rental crisis worsens: Suburbtrends
Victorian property investors are exiting the market en masse, fuelling fears the state’s rental crisis is set to get worse. See the suburbs where renters are most likely to lose their homes.
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Thousands of landlords have listed rental properties for sale in Victoria in the first two months of this year in a further blow to already struggling tenants.
Research by Suburbtrends has revealed the hotspots where the most investors are selling up and where renters might soon be facing eviction – if they haven’t already been ordered out. Search your suburb in out interactive map below
Data crunched by the real estate analytics company shows 8738 ex-rental homes were listed for sale in Victoria across January and February.
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This equated to 21.63 per cent of all residences on the market in areas with a minimum five sales.
In comparison, during 2023’s first two months, 5811 former rentals made up 17.52 per cent of homes for sale.
The 4.11 per cent difference between the two years was Australia’s largest aside from the ACT’s 5.8 per cent increase.
Suburbtrends founder Kent Lardner said any suburb or town experiencing a 2 percentage point spike or higher was concerning.
“I think the alarm bell has started now,” he said.
“There’s always a natural number of people selling rentals. But the thing that is not normal is that significant spike.”
Australian Bureau of Statistics figures show roughly 34.8 per cent of new home loan commitments by value were issued to investors last year.
It means that of the ex-rentals covered in the Suburbtrends data, only 34.8 per cent are likely to be purchased by an investor and returned to the rental pool.
Mr Lardner added that migration rose last year at a time when new housing construction approvals were falling, according to ABS statistics.
He noted that those who argued rentals being sold were giving tenants a chance to buy a home were ignoring the extremely high levels of migration.
“If a rental exits and goes to a wealthy new migrant, there’s just one less property for the existing renters in that area,” he said.
This year, Melbourne landlords have looked to offload homes in droves.
Suburbs most likely for tenants to lose a property included Mt Waverley with 270 ex-rentals up for grabs, South Yarra with 160, Point Cook with 122, Richmond with 108 and St Kilda with 102.
Advantage Properties buyer’s advocate Frank Valentic, who regularly appears on television show The Block, said 300 rental properties his company previously managed on behalf of landlords had been sold in the past five years.
Mr Valentic said unless the state government rolled back hiked land taxes on secondary and investment properties valued at $50,000 or more, introduced in January, and some of 2021’s more than 130 changes to Victoria’s tenancy laws, the state was “heading for a rental disaster”.
According to PropTrack, Victoria’s rental vacancy rate plunged to a record 1.08 per cent low in February.
“Victoria’s going to have a chronic rental shortage in the future and we’re already seeing the start,” Mr Valentic added.
He is considering selling a Reservoir investment property he has a tenant in after the land tax bill doubled to about $8000 under the new laws and won’t even consider keeping one unit, from a Mornington block he will soon renovate and sell, as a future rental.
Mr Valentic acknowledged that while some of the state’s rental legislative amendments were warranted, the Allan government should reinstate a Greater Melbourne landlords’ ability to give a tenant 120 days’ notice to vacate for reasons other than selling, renovating or having the property owner or a relative move in.
A 2023 Property Investment Professionals of Australia survey of 1724 investors found almost a third of Victorian respondents had sold one or more Melbourne properties in the past 12 months.
PIPA chair Nicola McDougall said investors had started selling en masse even before Victoria’s increased land taxes kicked in.
“Make no mistake, investors already considered Victoria the least accommodating state for investors in the nation, so this latest cash grab is the final nail in the coffin for its dwindling rental supply,” she said.
“Victorian renters must brace themselves for a prolonged rental crisis that is likely to get much worse before it ever gets any better.”
As a young property investor, Maggie Zhang ate rice for dinner most nights to save money.
The healthcare management consultant, who also runs a short-term accommodation management venture with a business partner now owns six properties — including her home and a Heathmont unit she is renovating to sell with a friend.
“I was happy to eat brown rice, baby broccolis and chilli sauce for dinner for a year when things were tight rather than miss out on a property opportunity,” Ms Zhang said.
“It wasn’t easy, but I’m very glad I did it.”
She is now considering selling her Broadmeadows and Frankston North rentals in order to buy a long-term home, plus other properties to renovate and sell.
Higher land taxes and cumulative interest rate rises have been “pretty tough” but she remains optimistic, advising would-be investors to seek advice like she did from industry experts such as Advantage Property Consulting director Frank Valentic.
“I think now is a really good time to get into the market, investors are really aware rate cuts are imminent although no-one knows when,” Ms Zhang said.
Top 20 Melbourne suburbs with ex-rental properties for sale, January-February 2024
Mount Waverley – 270 rental properties listed
South Yarra 160
Point Cook 122
Richmond 108
St Kilda 102
Hawthorn 93
Tarneit 92
Pakenham 84
Frankston 83
Prahran 81
Carlton 78
Reservoir 78
Werribee 73
Hawthorn East 72
Craigieburn 70
Dandenong 69
Melbourne 69
Elwood 62
Docklands 60
Brunswick 59
Source: Suburbtrends
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