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New research has uncovered the critical role that property investors play in building a sustainable housing future for Australia.
A new study from the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) has highlighted a pressing shortage of property investors, releasing an urgent call for tens of thousands of additional property investors to address the ongoing rental crisis.
The research indicated that Australia fell short of nearly 35,000 property investors over the past five years who can invest in a greater supply of rental properties, a gap that threatens to deepen as the population grows.
From March 2019 to March 2024, the country’s population swelled by approximately 1.8 million, necessitating around 212,000 new rental properties and a corresponding increase of 145,000 investors to accommodate these new households, the research claimed.
However, data from the Australian Taxation Office (ATO) reveals that only about 111,000 additional property investors entered the market in the five years leading to 2022.
PIPA chair Nicola McDougall pointed out that while investor growth had paralleled population increases from 2003 to 2017, recent years have seen a troubling decline.
“From 2003 to 2017, the number of individual property investors grew steadily, with annual increases ranging from 56,000 to 60,000,” she noted.
McDougall cited various barriers that have deterred potential investors, such as increased market interference, stricter lending policies, regulatory changes and tax increases.
The research also documents a significant drop in investor growth, averaging about 22,300 annually over the past five years, marketing a decline of nearly 60 per cent compared to the long-term average. PICA chair Ben Kingsley emphasised that this reduction is pivotal in understanding the current rental crisis.
“Critics might claim we are self-serving, but various statistics confirm that investor activity is far below the level needed to house our growing population,” Kingsley said.
She stated that the national vacancy rate plummeted from around 3 per cent between 2015 and 2017 to just 1.2 per cent this October, with only about 36,000 rentals vacant nationwide.
The recent 2024 PIPA Annual Investor Sentiment Survey underscores these challenges, reporting that more investors have sold properties over the year to August compared to previous years. Roughly 65 per cent of these properties have been purchased by home buyers instead of other investors, further tightening the rental market.
“This year’s survey found that 14.1 per cent of respondents sold at least one investment property in the past year, up from 12.1 per cent last year,” McDougall explained.
Kingsley called for a shift in government policy to encourage property investment, asserting that it is essential for the economy and renters alike.
“Instead of disincentivising investment, governments should be encouraging investment into the private rental accommodation market and let these small businesses do what they do best.”
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