Are property investors buying or selling?,
More investors are currently buying properties than selling, new analysis reveals, with lower-debt investors replacing those with higher debts.
According to CoreLogic’s analysis, new loans to investors have consistently outpaced the number of inferred investor listings across Australia.
In October, investor listings reached about 13,000, which was below the peak seen in November 2021, showing a decline.
In contrast, new investor loans for the same period stood at 18,400, indicating a stronger demand for property investments.
Eliza Owen, CoreLogic’s head of Australian research, explained the analysis aimed to clarify conflicting views about investor behavior.
One view suggests investors are exiting the market, while the other indicates a growing share of investors are entering.
Data from the Australian Bureau of Statistics (ABS) showed new loans to investors rose by 18.8% over the past year.
Though there are more investors selling than usual, the data suggests that even more are seeking to buy properties.
This trend holds true in Victoria, despite the state government’s efforts to discourage landlords with increased taxes and protections for renters.
In fact, the number of investors selling properties in Victoria has only outpaced new loans on one occasion in the past year.
Owen concluded that the market currently appears balanced, with a strong appetite for property investment despite challenges.
Owen stated that New South Wales (NSW) closely mirrored the national trend in terms of investor activity.
She explained, “The volume of investment listings in NSW was 7% higher than the historical five-year average for October.”
Additionally, NSW outpaced Victoria in the number of listings, with around 3,900 properties listed throughout the month of October.
However, the key difference in NSW is that while listings were up, new investor loans also increased significantly.
In fact, new investor loans across NSW rose by almost 20%, indicating a growing interest in property investment within the state.
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This contrasted with the situation in Victoria, where Owen noted that investor listings were about 10% higher than usual.
She explained, “The number of investor listings was slightly higher than expected, though new loans were not as strong nationally.”
Owen suggested that the types of investors entering the market may be changing, with less leveraged investors replacing more indebted ones.
She pointed out that rentvesting, although still relatively small in scale, has also increased slightly, reflecting shifts in investor behavior.
Westpac senior economist Matthew Hassan commented that the idea of landlords fleeing the rental market, especially in Victoria, is not entirely clear.
He said, “The narrative that landlords are leaving the market affecting rental supply, especially in Victoria, is being challenged.”
The rise in new listings in Victoria followed the announcement of expanded land taxes on investment properties, he added.
While investor listings were higher than usual, Hassan noted that the increase wasn’t as significant as it first appeared.
He observed, “There was a notable rise in listings for units, particularly in middle-ring suburbs, coinciding with falling prices.”
Hassan concluded that this pattern likely explained Melbourne’s weaker market performance, which would be hard to explain otherwise.
Owen suggested that sluggish capital growth was driving some Victorian investors to sell, with weak returns impacting investor confidence.
She explained, “The combination of higher taxes, weak growth, and high interest rates has likely spooked some investors in Melbourne.”
Despite these factors, Owen noted that investor loans in Victoria have shown modest growth since the previous year.
Anthony Landahl, managing director of Equilibria Finance, remarked that investor activity has increased, driven by more realistic expectations and first-home buyers.
Landahl explained, “Many first-home buyers, unable to afford their own homes, are opting to invest instead to get onto the ladder.”
He noted that investors, previously subdued due to rising interest rates, are now more aware of cash flow requirements.
Landahl also mentioned that although the rental market remains strong, many investors are still facing cash flow challenges month to month.
Some of his clients are considering purchasing properties in Melbourne while prices are low, hoping for future capital growth.
However, Landahl acknowledged that his clients remain cautious about the impact of rising taxes and changes affecting investors in Victoria.
