The share of newly listed investor-owned residential listings has blown out to 36.3 per cent across Sydney during May, the highest level in two years, amid signs landlords are starting to feel the strain of the recent 12 interest rate rises, data from CoreLogic shows.
Investor listings have now jumped sharply higher than the 10-year average in most capital cities except in Canberra and Hobart.
The share of investor-owned residential listings jumped to a two-year high in Sydney during May, according to CoreLogic. Peter Rae
CoreLogic head of research Eliza Owen said higher interest costs over the course of the year may have prompted some investors to offload their property investments.
Based on average interest rates for investors, mortgage costs on the national median dwelling value at $715,092 have risen to $809 each week, while rents rose to $583, which equates to a shortfall of $226 a week.
In Sydney, the shortfall has risen to $469 a week based on the median dwelling value. It lifted to $312 in Melbourne, $200 in Brisbane and Adelaide and $262 in Canberra.
“While rents have risen at a record pace over the past few years, they generally have not risen as much as mortgage costs on a new loan,” Ms Owen said.
“If the interest burden is becoming too high amid an already high inflationary environment, investors may be looking to offload their investment.”
Across the country, the portion of newly listed ex-rentals ballooned to 30.3 per cent, which is 1 percentage point higher than a month ago and 5.2 percentage points higher than the long-term average.
Ben Kingsley, managing director of property investment advisory Empower Wealth, said the number of investors selling up could rise if rates continued to increase.
“I think some investors may not be able to weather multiple rate increases from here, so there’s going to be a percentage of landlords who have to sell because they’ve exhausted all means of discretionary income adjustments,” he said.
“And if there are a couple more rate rises, they may be the final straw for further sell-down on some investment properties.”
In Melbourne, investor-owned properties now account for 32.3 per cent of all new listings, the highest level in a year and 6.6 percentage points above the decade average.
In Brisbane, investor listings climbed to 33 per cent, which is 4.4 percentage points higher than the previous 10-year average, it increased to 34.4 per cent in Perth and to 35.8 per cent in Canberra.
Sydney city and the inner south posted the largest share of ex-rental listings in the country, accounting for 57 per cent of all new listings during May, a large increase from the 38 per cent decade average.
Across Parramatta, 47.6 per cent of all new listings were investor-owned. That figure was 43 per cent in the eastern suburbs and the inner west.
In inner Melbourne, nearly half of all new listings were landlord-owned. In inner Perth, 47.5 per cent were ex-rentals.
“Unsurprisingly, the biggest share of investment listings are being seen in the biggest investment markets, but what is striking is that the portion is so elevated in the traditional investment markets compared to the previous decade average,” Ms Owen said. “In other words, the investment markets have higher-than-usual market activity.“
Arjun Paliwal, founder of buyer’s agency InvestorKit, said recent investors may be more inclined to sell in the current market.
“The ones at risk are those who may have bought in the last few years just before the rates started going back up,” he said.
“They’ve seen some gains. However, they didn’t anticipate holding their investments during this high interest rate environment, so those investors are probably the ones who are most sensitive to higher rates.”
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