A quarter of Melbourne property investors sold at least one rental home in the past year as the city plunged from the nation’s second most popular state capital for landlords to second last.

The stats were revealed in the annual Property Investment Professionals of Australia survey, released Tuesday, which also estimated 217,000 investment homes have been sold off nationwide across the past year in a blow to Australian tenants.

The organisation now believes up to 38 per cent of investors are planning to sell a home in the next 12 months — double the figure predicted in 2022.

PIPA chair Nicola McDougall said with investors hit hard by interest rate hikes the number considering selling in the next year was at “scary” levels.

“A lot of investors have been selling … and it would be lovely to see more of them back into the market,” Ms McDougall said.

“But I’m not expecting that in the current regimens in the country. Investors have been selling in great numbers because they feel they have lost control of their asset, and at the moment we are not seeing that they will come back to the market in the numbers that they should.

”Nationwide, only 55 per cent of investors are considering buying in the next year, down from 62 per cent in 2021.

The survey of 1724 investors nationwide, including 538 in Victoria, found increased property taxes were the biggest motivation to sell for investors and had been a factor in 47 per cent of the sales nationwide.

This was followed by changes to tenancy legislation, 43 per cent, and rising loan repayment costs, 40.1 per cent.

In 2017 almost a third of investors felt Melbourne was the nation’s second best place to buy, behind only Brisbane. It has now declined to just 4 per cent, with only Hobart ranked lower as a state capital.

Property Investors Council of Australia director Ben Kingsley said the Victorian government should be “very worried” investors now feel the “juice isn’t worth the squeeze”.

“It’s very clear investors are ranking Victoria as the worst place to invest currently,” Mr Kingsley said.“It will send investors to other states or to avoid property as an asset. And that’s very concerning for future rental supply.”

PropTrack figures released on the weekend showed Melbourne’s vacancy rate fell to 1.19 per cent in August, the second lowest figure the firm has recorded.

The Melbourne-based Mr Kingsley said he believed Victoria would see some of the nation’s highest sales by investors in the coming 12 months as an upcoming land tax tweak is applied to investors from January next year.

PIPA’s estimates on sales across the past three years extrapolated the 12.1 per cent of survey respondents who said they had sold an investment in the past year to the 2.478 million investment homes listed in the 2021 Census.

It factors in that 27 per cent of investors had sold to another investor, but has not been adjusted for other properties purchased as investments.

Originally Published: Nathan Mawby | news.com.au | 12 September 2023

https://www.news.com.au/finance/real-estate/melbourne-vic/victoria-ranked-worst-state-to-be-a-property-investor-as-one-in-four-melbourne-landlords-sell-home-in-past-year/news-story/1d796cf4966bc885bbdf4e889c726c56?btr=c29e3561fc0bee05574185755bf9234f