Property investors are abandoning the rental market in droves, with new data showing a significant increase in investment property sales over the past year.
According to the 2024 PIPA Annual Investor Sentiment Survey, 14.1 per cent of respondents sold at least one investment property in the past year, up from 12.1 per cent last year.
PIPA Chair Nicola McDougall said the majority of these properties are being purchased by homeowners rather than investors, further reducing the supply of rental properties.
“These properties are predominantly being purchased by homebuyers, which means fewer and fewer rental properties are available to lease by tenants,” Ms McDougall said.
The survey found that 65 per cent of former rental properties were bought by homeowners, with only 31 per cent purchased by other investors.
Rising holding costs and new property taxes are cited as the main reasons for investors exiting the market.
Nearly 65 per cent of investors who sold had owned their properties for less than 10 years, with 20 per cent selling within three years of purchase.
The top reasons for selling included increased general holding and compliance costs (44.1 per cent), increased land tax or government charges (35.4 per cent), and reducing total debt exposure (32.9 per cent).
Ms McDougall said that the exodus of investors could lead to an even tighter rental market, with fewer properties available for lease.
The survey also found that investor sentiment has declined, with only 45 per cent of respondents believing it is a good time to invest in residential property, down from 55 per cent last year.
Government interference in the rental market was cited as the biggest concern for investors, with 86.8 per cent of respondents identifying it as a potential threat to their investment strategy.
Ms McDougall called on governments to reconsider their approach to rental reforms and property taxes, warning that continued intervention could further exacerbate the rental crisis.
“When asked what the biggest challenges or concerns were that might derail their
property investment strategy, a whopping 86.8 per cent said it was government interference in the rental market such as regulation, rental caps or freezes,” she said.
“The continual changing of the goal posts by various levels of government – masquerading as tenant-friendly policies – is continuing to negatively impact property investment sentiment as well as rental housing supply.”
