- There was a 2.9% in active property investors during March 2022
- This signifies a return to historical averages
- However, rental stock remains at low levels, according to SQM Research
Although there has been a rise in investor activity, this may not be enough, warns a property investment firm.
The Australia Bureau of Statistics (ABS) recently released its Lending Indicators for March which revealed that the number of property investors active in the market increased by 2.9% in March.
35.1% of mortgage demand by value represents investors, up from the low of 22.9% in 2020.
Although investor activity is now at historical averages, the ongoing rental crisis is unlikely to be remedied soon, suggests Lachlan Vidler of Atlas Property Group.
He noted that while active investors have returned, they had been mostly absent from the market for several years.
One only needs to consider that out of about 2.5 million rental properties in Australia – according to the last census – there were only about 37,000 vacant in March this year,” Mr Vidler said.
“To put this into perspective, there were nearly 90,000 vacant in December 2016, which was the most recent peak vacancy rate period, according to SQM Research.”
The current rental crisis he said had been a number of years in the making, with lending restrictions on investors part of the reason, such as the prospect of negative gearing being abolished by the Labor Party if elected back in 2019.
“But one of the major reasons why our rental market is so severely undersupplied is also because a huge number of investors sold their properties to owner-occupiers last year,” he said.
“Their motivations for doing so were no doubt varied, but the potential risk of having to continue to provide accommodation for tenants during the pandemic, while receiving no rent in return, was likely a valid concern for many.
Lachlan Vidler, Atlas Property Group
“Also, investors in markets that had seen little capital growth for years, such as parts of Queensland, South Australia and Western Australia, made the most of the extraordinary market conditions last year to offload their properties.”
While there was a record volume of owner-occupier activity last year, investors generally remained subdued, thus impacting supply levels.
“With property prices softening in some locations, but rents increasing in most areas, investors are likely to continue to be active in the market, but there is long way to go before the rental crisis is going to improve,” Mr Vidler said.
“New investors need to be diligent in their property and area selections, because not every part of the nation makes a sound investment location over the medium- to long-term – regardless of the current upswing in weekly rents.”