Property Investors Are Starting To Sell, Though The Reason Why Might Surprise You
In This Week's How's The Market | Edition 52
Property Investors Are Starting To Sell, Though The Reason Why Might Surprise You
The fear of overpaying has turned into the fear of missing out.
Melbourne’s Property Market Is The Hottest In 18-Months
Property Investors Are Starting To Sell, Though The Reason Why Might Surprise You
There are a lot of investment properties coming onto the market across Melbourne and Sydney at the moment. The numbers from May show that investor-owned residential listings made up 36.3% of all listings in Sydney which is the highest level in the last two years.
In Melbourne, investor-owned properties now account for 32.3% of all new listings, the highest level in a year and 6.6% above the decade average.
Agents on the ground have been telling me over the last couple of weeks that they have a lot more stock from investors coming up over the coming months too.
Though not all investors may be selling for the reason you think.
Here are 4 reasons why some investors are currently selling their investment properties:
The obvious one is interest rates. As we have now experienced 12 interest rate rises and are at the highest levels since 2012, many investment properties that were positively geared 13 months ago are now negatively geared and investment properties that were slightly negatively geared are now significantly negatively geared. For those feeling the pressure financially and in a position where they need to sell, it can be a much easier decision to sell an investment property over the family home.
Some investors are now just cashing out from their recent gains. Investors that bought properties 5, 10 or 15 years ago would most likely have seen their properties rise significantly in value over the duration of their investment and they may want to sell now if they believe their property won’t rise further in the short term whilst they’re paying increased holding costs.
Investment properties are becoming increasingly more costly to hold in Victoria due to new legislation. I have spoken with some sophisticated investors that are now 'sick of Victoria' and the new legislation that has been brought in and would rather invest their money in other states with less strict rules. Some property managers have told me directly that they have lost a lot of investors on their books as they can't afford the upkeep of their properties. With the new increase of land tax and the recent addition of the electrical safety rental minimum standard in Mar 2023, it has become a lot more expensive to hold an investment property, especially if you own multiple in Victoria.
Some investors are upgrading. Some buyers, like a recent client of ours, are actually less worried about the rates and selling their investment property in order to fund the upgrade to their dream family home.
There are many reasons why an investor may want to sell, though rising interest rates make each reason a bit more compelling.
What The Agents Are Saying
This week, we’re going to give you info straight from the horse's mouth. The general sentiment hasn’t changed a lot this year with lack of supply still being the main issue. See below what the agents are saying:
Geelong
Callen Lowther - Armstrong Real Estate
“The market is holding steady currently, well-presented and priced homes are achieving excellent results.
Expect an increase in homes hitting the market if rates continue to climb.”
Inner Melbourne
Will Anderson - Shelter Real Estate
"Prices continue to thrive, propelled by scarce supply at its peak. A testament to the strong demand and limited inventory. The fear of overpaying has turned into the fear of missing out."
South East Melbourne
Liza Hickey - Barry Plant Pakenham
“Officer is proving still strong with buyer demand, the winter market has meant there have been fewer homes on the market and strong immigration has steadied and even increased values in some pockets.”
The Wow Factor!
3387 Point Nepean Road, Sorrento, Vic 3943
The impressive light-filled cafe-esque alfresco area is a massive Wow Factor on this home!
Along with the white kitchen and tennis court, this home looks like the perfect beach get away.
Price Guide: $6,500,000 - $6,650,000
In The Media
Melbourne’s property market is the hottest in 18 months. But will it last?
It always fascinates me how quickly the media can change their tune.
Just a few weeks earlier the media was predicting armageddon because of the fixed-rate cliff, though I haven’t seen many articles like that recently as there is now great auction results and clearance rates to report on…
Final Thoughts
Whilst more investment properties are currently coming onto the market, I’m also noticing more investors buying.
One property last week had 4 investors competing against each other and no owner-occupiers.
Even though more investor-owned properties are coming onto the market, days-on-market is still staying competitively low so I cannot see this negatively impacting the value of properties in the near future.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
