New research has revealed almost 30% of Queensland rental dwellings have vanished from the market in the past two years.
It is believed that more than 160,000 investment properties were potentially sold to homebuyers, according to the 2022 Property Investment Professionals of Australia (PIPA) Annual Investor Sentiment Survey.
The survey found 45.1% of investors sold at least one property in Queensland in the two years to August 2022. Meanwhile, 65% of investment properties were bought by owner-occupiers over the period, resulting in Queensland rental properties potentially falling by 29% in two years.
The survey also revealed 19% of investors nationwide signalled they intend to sell more property in the financial year ahead, with the main reason being Queensland’s new land tax law which would penalise owners of property in other states and territories.
The eighth annual report was based on an online survey conducted in August 2022 with 1,618 property investor respondents.
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PIPA chair Nicola McDougall (pictured above) said it was clear that investors have had enough of being the cash cow for all levels of government.
“From Coolangatta to Cairns, investors have deserted the Queensland market over the past two years with more rental pain on the horizon as well,” McDougall said.
“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 underestimated the volume of rental properties that have been jettisoned from the market. 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.”
McDougall said, over the past two years, investment activity was below historical averages as further analysis of the data showed that it was generally owner-occupiers, including first-time buyers, who had purchased the former investment stock.
“With nearly 270,000 former rental dwellings potentially being bought by homebuyers nationwide, it was clear this was one of the main reasons why there is such a critical undersupply of properties available for rent,” she said. “The number one reason investors sold was due to the positive selling conditions at the time, followed by reducing their total borrowings and changing tenancy legislation, making it too costly or hard to manage.”
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McDougall said these investor insights helped to explain why so many investors – including herself – had sold up.
“After the moratoriums on rental evictions ended and prices started to rise, investors offloaded their properties in the hundreds of thousands. That said, even with the strong market conditions last year, after all the costs including capital gains tax that I paid over the 15 years I owned a property in a Brisbane middle-ring suburb, I would have been better off financially driving an Uber in my spare time,” she said.
“However, the number one reason investors may sell their property over the year ahead is because of the Queensland land tax. The survey provided investors with more than a dozen potential reasons why they may sell a property in the next year and the Queensland land tax was the top reason with nearly 31% of investors.”
McDougall said investors were also feeling like they had lost control of their real estate assets as 29% were considering selling a property because of changing tenancy legislation making it too costly or hard to manage.
“This was 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%). If the percentage of investors who are considering selling winds up doing so, then we are going to see even higher rents as well as a sharp increase in homelessness – especially in Queensland,” she said. “PIPA has been warning about the potential rental undersupply from lending restrictions on rental supply for five years now, but governments have repeatedly refused listen.”
McDougall said it was clear that investors were sick and tired of being treated appallingly by policymakers who continually believed they were an endless supply of revenue for their coffers.
“But when nearly 270,000 rental dwellings disappear in just two years – because governments thought private investors would forever shoulder the burden of providing rental housing while being taxed and taxed some more – well, have we got news for you,” she concluded.