Investment properties offloaded as landlords indicate they’re ‘over it’

Landlords who have been absorbing additional unforeseen costs with every interest rate hike have revealed their new approach.

Strain on the rental market is set to be further heightened as fed up landlords offload their investment properties amid ongoing rising mortgage repayments.

The trend was highlighted in Queensland in new PropTrack research that revealed investor-owned sales across the state increased to 8 per cent in one month to 29.5 per cent.

The jump was the biggest of any other state, according to the research, which was compiled based on investor-owned properties listed for rent and then sold on realestate.com.au.

Data also uncovered that landlords selling up had been above 21 per cent since the land tax legislation had been introduced in 2022, and while it was later repealed, it indicated an increase in the share of rental properties since interest rate hikes kicked off in May 2022.

Sweeping changes to investor habits were indicative of the broad impact of rising rates, management costs and new government regulations, experts revealed.

Ray White Marsden realtor, Jett Jones, told Courier Mail three clients had called asking to list their investment properties because they were “over it”.

“Interest rates are too high,” she told the publication.

Financial pressures had worn Queensland investors thin, PropTrack senior economist Paul Ryan said.

Investors are reportedly ‘over it’ and are selling properties in droves.

“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.

“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.”

Some new investors were entering the market though, leading Mr Ryan to believe the ones exiting were ones who held their properties for a longer period.

He added an influx of investor stock could present positive buying opportunities, given “investors and owner occupiers often compete for the same properties”.

Sydney

Meanwhile, Sydney has continued to lead Australia’s home price recovery, with prices increasing a further 0.28 per cent in July to levels 5.26 per cent higher than the slump in November last year.

The city has regained most of what was lost in values in 2022, with property prices now just 2.22 per cent below their February 2022 peak.

Melbourne

Home prices in Melbourne rose slightly in July to now be hovering just 1.30 per cent below the same time last year.

Still, prices are 4.91 per cent under their peak in March 2022, but up 0.97 per cent since a low point in January this year.

The city has had a sluggish home price recovery in comparison to Sydney.

Adelaide

South Australia’s capital performed the best nationally in July with house prices rising 0.62 per cent to a new peak and up 4.64 per cent from this time last year.

Home prices are sitting 5.95 per cent above levels in July 2022, with the comparative affordability of the city’s homes holding up despite rapid interest rate rises.

Competition was also intensified due to low stock.

Sydney’s house price recovery has smoked other capital city’s. Picture: NCA Newswire / Gaye Gerard

Perth

Property prices across Perth have experienced steady incline in 2023 and are now up 5.13 per cent after increasing 0.36 per cent to a new peak in July.

Perth has been the strongest performing capital city market in the past year, being up 6.56 per cent from last year.

The city is also just behind Darwin in terms of cheapest dwelling values.

Darwin

Unlike other markets, Darwin hasn’t had a recovery in prices in 2023, but it also didn’t see a massive downturn in 2022.

Prices fell by 0.08 per cent in July to 1.22 per cent below levels a year ago, and 2.01 per cent below their peak in May 2022.

Hobart

While Hobart’s house prices rose 0.21 per cent in July, it has remained the weakest performing capital when comparing its annual price growth.

It does however follow several years of outperformance and strong growth during the Covid pandemic.

The city’s house prices are still up 38.3 per cent since March 2020.

Canberra

Home prices in Canberra have remained 5.91 per cent below their March 2022 peak, with prices falling 0.02 per cent in July and being down 2.98 per cent from the same time last year.

The city has recovered some of 2022’s price decline in recent months, but it still has a way to go.

National recovery

National house prices have continued to recover overall in 2023, with July marking the seventh consecutive month of national home price growth, reversing most of the damage done in 2022.

Demand and limited new listings have offset the impact of interest rate rises that have continued this year, insights from PropTrack have revealed.

Housing demand is high heightened by overseas migration and tight rental markets, the research revealed, with the unemployment rate is low and wage growth – still behind inflation – has increased.

While total stock on market has increased slightly, the flow of new listings has remained relatively low in recent months.

Given limited new stock is coming to market, buyer interest is being concentrated, leading to increased competition and solid selling conditions that are seeing prices continue to lift.

Its expected that interest rates – at their peak or nearing it – will sustain confident and maintain home price lifts and result in positive annual price growth.