Data from Suburbtrends shows that more than 4,000 ex-rental residential properties across Victoria were listed for sale in May. This includes 3,126 in Melbourne, which is 32% higher year-on-year.
Suburbtrends founder Kent Lardner says the Victorian state government’s new tax on property investors has been a key driver of landlords’ exit from the housing market.
“More landlords are leaving Victoria due to the increased tax burden and the ongoing exodus could spark further increases in rents as more ex-rentals are turned into owner-occupied homes”, he said.
Some 2,372 ex-rental properties were also listed for sale in Sydney during May, according to Suburbtrends, representing a year-on-year increase of 20%, while there were 3,593 such listings across NSW.
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Propertybuyer CEO Rich Harvey says the NSW state government’s latest land tax changes outlined in Tuesday’s budget will prompt more investors to sell up.
“The concept of freezing the threshold is a disincentive for investors to buy more properties in NSW”, he said.
“I’m looking to buy more properties right now. But this new land tax rule makes me think twice about buying more properties in NSW”.
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The notion that there is some great exodus of property investors is contradicted by the data on investor mortgage commitments, which are booming:
New investor mortgages grew by 36% in the year to April. The investor share of total mortgages has also risen to 37.0%:
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Thus, the situation represents a case of investor churn, not an investor exodus.
Moreover, even if investors did sell their homes, it wouldn’t represent doom for renters, since this home would either be purchased by another investor or a first-time home buyer.
First-time home buyers will decrease demand for rental homes in proportion to the decline in rental supply if they purchase these homes.
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Effectively, a home for rent will be transformed into a home for sale.