There is a lot of hoopla in the media at present over figures showing that investors are bailing out of Australia’s housing market.
The proportion of investor-owned listings in Sydney hit a record high of 39.8% in June, according to CoreLogic.
The share of investor-owned listings also grew to 32.7% nationwide, the highest level in a year.
Over the weekend, the Herald-Sun reported that a “mass exodus of landlords” will “further constrict already disastrous rental market”.
“Melbourne landlords are considering a mass exodus with property industry chiefs warning “thousands” are looking to pull out in a disastrous hit to the city’s rental market”, the paper reported.
PropTrack chief economist Cameron Kusher claimed things would become “even tougher” for tenants.
I have always found this line of reasoning strange.
When an investor sells a home, it doesn’t just vanish. Instead, it either gets passed onto another investor or an owner-occupier.
In either case, the impact on the rental market is neutral.
If the home is sold to an owner-occupier, then demand for rental homes reduces by the same amount as the decline in rental supply.
If anything, the sale of investment properties is good news for first home buyers, as it means more will achieve home ownership.
As illustrated in the next chart, there is a near perfect negative correlation between investor mortgage commitments and first home buyer mortgage commitments:
Thus, when investor demand falls, first home buyer demand typically rises.
The bigger issue is that overall housing supply is not keeping pace with the Albanese Government’s record immigration, meaning Australia’s housing shortage continues to worsen irrespective of investors selling-up:
Indeed, Cameron Kusher told the Herald-Sun that “I think we need to have a discussion about what the appropriate level of migration is”.
“When you can’t house the people here in the country, does it make sense to bring more and more people in and potentially making it worse for people already here?”
That is the issue right there, not the faux concern over investors selling to owner-occupiers.
