Rapidly rising interest rates have seen Aussie property investors forced to fork out tens of billions of dollars in extra mortgage repayments, new analysis has revealed.

Property Investment Professionals of Australia (PIPA) calculations show the characterisation of landlords as greedy by some politicians are way off the mark.

Based on figures and assuming averages*, property investors are potentially paying a staggering $44 billion more in mortgage repayments due to interest rates increasing by four percentage points since May last year.

“The severe impact of skyrocketing interest rates on property investors – the majority of whom are mum-and-dad investors with just a single rental property – is being ignored by political parties with vested interests,” PIPA Chair Nicola McDougall said.

The stark analysis comes amid the latest attack of landlords by the Greens, which last week claimed a national rent freeze could have “saved” tenants $3 billion.

“There’s no doubt many renters are doing it tough because of higher rent prices, but the cause of those hikes is incredibly high demand from tenants and a historically low supply of available dwellings,” Ms McDougall said.

“If the Greens want to talk about costs, we invite them to recognise the incredible hit mum-and-dad investors have taken – a figure that dwarfs the number they’ve come up with.”

The Greens have demanded a national freeze on rent prices for 12 months, blocking the Federal Government’s desperately needed $10 billion Housing Australia Future Fund until it gets its way.

“While most parties are trying to constructively find real solutions to the rental crisis, the Greens are once again seeking the spotlight with their absurd and unrealistic demands for a rent freeze. It’s petty politics that achieves nothing while people are struggling,” Ms McDougall said.

“What the rental market needs is a dramatic increase in supply. Building new homes takes a long time – the most efficient way to quickly boost the number of available rentals is to encourage private investors to buy.”

Last week, Greens spokesperson for housing and homelessness Max Chandler-Mather claimed renters had “just copped the largest quarterly rent increases in 35 years” but failed to acknowledge a decade of flat price growth.

Prior to the unprecedented circumstances of the COVID-19 pandemic, rent price increases were well below inflation, according to analysis^ by former PIPA Chair and property academic Peter Koulizos.

“While we acknowledge rents have risen sharply recently and many are struggling, property investors have contended with difficult conditions for many years now,” Ms McDougall said.

“The suggestion that investors are somehow cashing in on higher rents, especially when interest rates have skyrocketed since last May, is fanciful.

“For the vast majority of mum-and-dad investors, a rental property is a long-term asset designed to aid their retirement – it’s not an ongoing moneymaker.”

Ahead of a meeting of the National Cabinet today, Ms McDougall called for politicians to end the attacks on property investors and focus on fixing the rental housing undersupply that has caused the rental crisis.

“We know from history that caving in to demands for dangerous policy reform, like the Greens’ crazy rent freeze proposal, only leads to an exodus of private investors from the rental market,” Ms McDougall said.

“Fewer property investors mean fewer rental properties, which will inevitably force rents up even higher.”

NOTE FOR EDITORS:

* Average investors are assumed to be paying a $500,000 interest-only loan with 30 years remaining. It assumes an average variable interest rate of 2.86% in April last year and a current rate of 6.86%. The calculation does not factor in loan fees and charges. According to the ATO, the Number of Individuals with Rental Properties Incomes was 2,245,539 in 2020/201 – the latest official data available.

^ Between June 2012 and June 2022, the cumulative growth in rent prices seen across Australia was 11%. Meanwhile, the cumulative CPI increase in that same period was 25.6%.

ENDS

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