Is Australia experiencing an ‘investor exodus’?

“It comes down to cost of living pressures. Negative gearing makes sense if your investments are profitable, but it becomes a lot less attractive when you’re digging deep into your own pocket each month to pay for an investment,” Lardner said.

Nicola McDougall, chair of Property Investment Professionals of Australia (PIPA), also evoked the idea of a mass investor exodus, stating: “In a time where mortgage repayments have skyrocketed, many investors perhaps just (aren’t) financially able to hold on to those properties.”

But according to van Onselen, the data doesn’t back up these claims.

“The latest Australian Bureau of Statistics (ABS) data shows that there were $10,670 million worth of investor mortgage commitments in May 2024, up from 29.5 per cent from the same month in 2023,” van Onselen said.

In fact, new investor loan commitments are almost on par with the 2022 peak, driven by “loans to purchase existing homes”.

“The situation is not nearly as grim as Lardner and McDougall make out,” van Onselen stated.

According to the economist, a more accurate characterisation of current investor trends would be a “churn” – investors facing financial strain are selling up, only to be quickly replaced by new investors who are willing to front high mortgage rates.

His view was shared by Tenants Victoria director of community engagement, Farah Farouque, who stated in the Herald Sun that the churn of rental property by landlord buying and selling activity was “a built-in feature of Australia’s market-based rental system”.

In the original article, Lardner concluded that the current state of Australia’s property market would likely remain for the foreseeable future.

“We had the solution 40 to 50 years ago, which was social housing, but we turned our back on it.”

“We have to accept that the private landlord market has delivered us unaffordable housing,” Lardner said.

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