Landlords ditching proximity for profit as remote investing gains traction

For the year to February 2023, data revealed the average distance between where landlords live and where they invest has reached 857 kilometres. 

The figures are up from 559 kilometres in the year to November 2021, and 294 kilometres in the pre-pandemic period to January 2020. 

Mike Mortlock, the managing director of the property depreciation and quantity surveying firm, noted the latest data showed investors have not chosen assets closer to home even after the easing of lockdown restrictions, as many have embraced remote investing. 

“There was a possibility that once lockdowns restrictions eased, the re-introduction of in-person inspections could have seen investors choosing assets closer to home. 

“Instead, the opposite has happened. Investors have embraced remote investing and are now entirely comfortable with securing property assets in the best possible markets regardless of location,” he explained. 

Mr Mortlock said there were several factors driving investors not to stay on their home turf when exploring opportunities. 

Particularly, he noted data are looking into “promising markets”, which are typically located away from the east coast capitals. “For instance, Perth has seen a substantive uptick in investor participation,” he noted. 

Another factor driving the growth in borderless investing is price, according to Mr Mortlock, highlighting that investors are drawn to “price accessible options”. 

“The average price an investor now pays for a property is $691,045 according to our research. That sort of figure for house investors, in particular, is more easily achieved outside of the big capital cities,” he stated. 

While price and location have a big hand in the shift, he highlighted the widespread acceptance of doing business remotely, partially thanks to the pandemic, as a major driver for the growth in remote investing. 

“Nowadays, you are just a video call away from any buyers’ agent, conveyancer or building inspector in Australia. This has opened the entire nation as a market to smart investors. They can concentrate on studying the analytics from home while employing a local professional to do the heavy lifting,” he explained. 

He further noted that the rise of online platforms has enabled investors to connect with their peers or seek professional advice, making remote investing more accessible. 

“All of this tells me that while the evolution of investing was already moving toward going remote, the pandemic has accelerated the transition,” he commented. 

Mr Mortlock said his long-term outlook for remote investing is that it will continue to gain traction. 

“Investors will continue to grow comfortable with buying remotely and ‘site unseen’ as the calibre and quality of data improves. This is particularly so for landlords needing to maximise their cashflow in the face of rising costs,” he concluded. 

Anti-landlord legislation hurting investing activity

While remote investing has opened up new opportunities for investors, the expert noted the trend could “spell bad news” for rental markets which are already struggling with low vacancy rates. 

Particularly, Mr Mortlock said the latest report should ring alarm bells for rental markets where anti-landlord legislation has been introduced, such as in Brisbane which has a rental vacancy rate hovering around 1 per cent. 

The Real Estate Institute of Queensland’s (REIQ) Residential Vacancy Rate report found the number of available rental properties in the state for the first three months of the year stood at 0.9 per cent — significantly below the level that qualified the region to be a “healthy market”.

In a bid to address the raging rental market crisis in the state, the Queensland state government has put forward proposals to ease the pressure on tenants. 

As part of its efforts, the Palaszczuk government announced on 28 March that it will limit rent increases to once every 12 months. Notably, industry bodies had responded negatively to the idea, with REIQ labelling the proposal as showing “no grasp on economics”.

“Our tightest rental markets are suffering from a severe shortage of rental property supply, but much of that is due to politics rather than market forces,” Mr Mortlock stated.  

The expert explained remote buying has given investors a voice, particularly through “voting with dollars” when it comes to legislative changes in the tenancy space.

“Expect those jurisdictions which introduce anti-landlord/pro-tenant/high-tax legislation to feel the sting of even further reduced investor participation,” he stated. 

Instead of discouraging investors through “anti-investor rhetoric and ongoing restrictions that favour tenants over landlords”, Mr Mortlock said regions with incredibly low rental supply should be “looking to entice more investment from right across the nation”.