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An investment executive has raised the alarm that property investing is collapsing in the Sunshine State.
Citing the latest ABS lending figures, Property Club president Kevin Young said the rental crisis would worsen in Queensland, with the state recording “the steepest fall in investment lending nationally.
From March 2022 to February 2023, investor lending fell by 39.3 per cent in Queensland — and by nearly $1 billion.
In March 2022, investor lending in the state was up at $2.31 billion for the month. Now, it’s sitting at just $1.4 billion for the month of February.
Nationally, lending has fallen by 32.6 per cent.
Mr Young has blamed the “collapse” locally in Queensland on excessive taxation and red tape imposed on investors.
Adding to the woes are rising interest rates, which the president said “could not come at a worse time for the local rental market.”
“Higher interest rates are killing the supply of new rental properties in Queensland and throughout Australia.
“As a result of this widening gap between the supply and demand of rental properties in Australia, average weekly rents have surged by nearly 22 per cent in the capital cities over the past 12 months.”
Against this backdrop, migration to Australia is surging. Mr Young pointed out that net overseas migration was 304,000 in the year to last September and the highest in more than a decade.
“Based on official government figures, we can expect another 650,000 new arrivals over the current two years, which was well in excess of the previous two-year high of 577,000 in 2008 and 2009.
Without action being “immediately” taken to increase rental stock supply, Mr Young is expecting that rents will rise by another 20 per cent over the coming 12 months.
But even improved yields won’t bring back investors, Mr Young flagged, unless the government proactively encourages private investment in the sector.
He argues that property investors have been leaving the market because of increasing government red tape, “as well as new federal government engineered rules that limit the time frame of interest only loans and the removal of tax depreciation benefits on second-hand properties.”
“The restoration of depreciation benefits associated with buying established properties alone would quickly result in thousands of more affordable second hand properties coming into the rental market,” he considered.
He also urges last week’s brake on the Reserve Bank of Australia’s cash rate to continue to the point where rates are once again reduced — and “as soon as possible to avoid a rental disaster in Australia.”
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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