Investors seemed to have taken advantage of the upswing in Queensland prices over the past two years by selling at least one of their properties, resulting in the current rental undersupply.
The 2022 Property Investment Professionals of Australia (PIPA) Annual Investor Sentiment Survey found that the Sunshine State lost nearly a third of its rental dwellings over the last two years as close to half of investors sold at least one property.
Two-thirds of all investment dwellings were potentially bought by owner-occupiers over the period — this is equivalent to 162,000 rental dwellings that turned to owner-occupied housing.
PIPA Chairperson Nicola McDougall said more investors are likely to sell, which would compound the rental crisis in the state.
“We had an inkling that investors had been selling their holdings over the past year or two, but these results show that even we had under-estimated the volume of rental properties that have been jettisoned from the market,” she said.
“The fact that 45.1% of investors sold at least one property in Queensland is mind-blowing – especially since this was mostly a period when the ridiculous new land tax wasn’t even law.”
Queensland had the highest share of investors who sold their properties over the past two years, followed by New South Wales (24.1%) and Victoria (19.1%).
Overall, 16.7% of investors nationwide have sold at least one property over the period, which reflects a total rental supply drop of 10%, or about 269,000 dwellings.
Ms McDougall said investors also sold their properties to take advantage of the positive selling conditions.
“These investor insights help to explain why so many investors sold in Queensland because property prices were mostly stagnant there for years before the pandemic because of its underwhelming economy,” she said.
“So, after the moratoriums on rental evictions ended, and prices started to rise, investors offloaded their properties in the hundreds of thousands.”
However, many investors are still planning to sell over the year ahead. The survey also found that around 19% of investors nationwide are thinking of selling — the number one reason for many of them is the new land tax in Queensland.
This could further deplete the supply of rental properties across Australia by another 200,000.
In Queensland, a third of investors are likely to sell, citing the new land tax as the top reason.
“Investors are also feeling like they have lost control of their real estate assets, because 29% are considering selling a property because of changing tenancy legislation making it too costly or hard to manage, followed by the threat of losing control of their asset because of new or potential government legislation (27.5%), and the threat of rental freezes being enforced by governments (23%),” Ms McDougall said.
Buying intentions from investors are also looking gloomy, with only 58 % of them believing it is a good time to invest in residential property.
Ms McDougall said these results should remind governments, particularly of Queensland, to listen to the sentiment of investors and analyse the impacts of the exodus on rental markets.
“When we warned about the potential impact from lending restrictions on rental supply back in 2017, no one took any notice, and when we started highlighting the looming rental undersupply some two years ago, again, we were ignored as real estate zealots,” she said.
“It is clear that investors are sick and tired of being treated appallingly by policymakers who continually believe that they are an endless supply of revenue for their coffers.”
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