One of the main reasons behind the current record low vacancy rates around the nation is due to investors selling their rental properties to homeowners over the past two years, according to Grant Foley Property Director and Buyers’ Agent Grant Foley.
The latest SQM Research vacancy rate data has revealed national residential property rental vacancy rates fell to just one per cent in May – a 16–year record low. Mr Foley said one of the main factors that has contributed to the critical under-supply of rental properties is the fact that many investors have sold their properties since the start of the pandemic.
Why did property investors opt to sell?
“Many investors choose to take advantage of the rising market conditions to offload
their holdings, especially in locations where there had been negligible price growth in
the years before. This has certainly been the case in parts of Greater Brisbane, where many investors had experienced underwhelming capital growth for many years, so when prices started to firm, they opted to sell rather than retain their properties,” Mr Foley said.
“I believe this is one of the reasons why the vacancy rate in Brisbane is just 0.7%.” Mr Foley said investors in other locations used the strong market to sell down their portfolios.
“Sydney investors also offloaded their properties to some of huge volume of homebuyers that transacted in the Harbour City in 2021. Investment properties in Sydney, especially houses in more affluent areas, were sold to upgrading homebuyers, which means that it is nearly impossible for families to find a house to rent now in these locations,” Mr Foley said.
What does the mass sale mean in the long run?
“We are expecting overseas migration to soar over coming years, compounding the rental crisis, especially in Sydney, which is where the majority of migrants ultimately arrive.”
Mr Foley said investor activity had also been well below historical averages for a number of years until recently, which also decreased the supply of rental properties, as did the reduction in household sizes as the lure of share houses became less appealing during the pandemic.