NSW property investors bailing out, causing more renter pain

Property investors in New South Wales are deserting the property market, ensuring more gloom for renters already struggling under the weight of rising rents a lack of properties on the market.

A recent survey conducted in the state found that of the more than 2,200 investors who completed the survey, an alarming 27 per cent were considering selling their investment property.

This is despite the well-publicised rent increases that should be a lure to investors. Clearly there are other factors influencing their plans.

The tenant perspective is well-represented in the rental crisis discussion, as it must be. The REINSW Rent Crisis Action Campaign calls on property managers and residential property investors to provide their views and bring balance to the discussion.

And some of the views expressed will be difficult for tenants to hear.

Asked, “Would tenancy law changes impact your decision to re-invest in residential property?”, 88 per cent of investors responded “Yes”.

Asked “Do you feel that landlords’ rights are appropriately considered when tenancy legislation is reviewed?”, 86 per cent responded “No”.

The message from investors is clear. In seeking to ride the wave of pro-tenant sympathy with ill-considered announcements that compound anti-investor sentiment, politicians are failing to address the issue at hand.

Discouraging investment in residential property is having a clear and concerning impact. Government – whoever it might be – must change tack.

Property investors sitting on sidelines

Many had hoped the Reserve Bank of Australia might take a breather on interest rate rises and that the upward trend might have levelled by now.

The tenth interest rate rise will pile on more pain for mortgage holders and see the uncertainty that has characterised the market in 2023 persist.

Many investors are choosing to bide their time given this uncertain environment.

Data from the Australian Bureau of Statistics for January 2023 shows that the number of new investment loan commitments declined by 6.0 per cent from the previous month and were down 35 per cent from a year prior.

Prices have eased since the pandemic peak and rents have risen on the back of extremely low vacancy. At face value, this should be good news for investors. But there’s more to it.

Housing crisis an election issue

The NSW Election is approaching and the housing crisis is among the hot button issues, in particular, the critical shortage of rental accommodation.

Unsurprisingly, we’ve seen more populist politics and no policies to address supply in the lead up to the election.

There is a great deal of sympathy for tenants at the moment given the extremely tight vacancy rates they face, and the upward pressure on rents. Doubtless, renters face significant challenges and they need support.

But this is where the disconnect occurs. Renters need homes to rent. Property investors provide these homes. Discouraging people to invest in property impacts rental supply. Tenants suffer.

The ban on ‘no grounds terminations’ and seeking to prohibit landlords from refusing pets into their property, no matter how unsuitable that property might be, amounts to telling investors what to do with their property.

Threatening to cap rents even as mortgage repayments rise sharply is undoubtedly causing landlords concern and erodes confidence in their choice to invest in residential property when compared to other opportunities.

There are other real examples that are compounded by unwarranted rhetoric. Investors are habitually referred to as ‘greedy’ in media headlines. Politicians predictably echo the negative sentiment.

Yet still the tenants suffer.