Prominent property investor Michael Yardney claimed, “There are fewer rental properties in Australia today because there are fewer investors buying property (owner-occupiers have dominated the market) and the number of investors selling up has trended upwards”.
“Tighter rental laws have reduced investor demand”.
“High borrowing costs mean there are fewer investment properties being bought”, Yardney argued.
Since the Reserve Bank of Australia (RBA) began its interest rate tightening cycle in May 2022 and rents started rising, other industry participants have argued similarly.
However, the data shows the opposite, with demand from new investors ramping up.
The following chart from Justin Fabo at Antipodean Macro shows the actual situation pertaining to investors.
As you can see, Australian Google searches for “investment property” have soared to near-record highs, while underwritten new investor mortgages have also picked up recently.
“Related Google search activity, which has lifted sharply, has typically led new investor housing finance”, Fabo explained.
The growing interest from investors makes sense given that rents are growing faster than prices, lifting yields:
Source: CoreLogic
“A rise in rental yields alongside an expectation that housing values could rise and rental markets remain tight for an extended period of time is likely to be seen as an attractive opportunity for property investors”, CoreLogic head of research, Tim Lawless, said earlier this week.
“Based on housing finance data, investors have recorded the most substantial lift in activity over the 12 months ending January 2024, with the value of lending up 18.5% compared with a 3.4% increase in owner occupier lending”, Lawless said.
With the RBA expected to begin cutting interest rates later this year and rents likely to continue rising strongly amid historically high net overseas migration, it makes sense that investor interest is growing.
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