Powered by MOMENTUM MEDIA

Property investors locking-in their gains while rental yields are ‘historically’ high

By Fergus Halliday 03 August 2021 | 1 minute read

Data suggests that investors are moving to consolidate their profits while they can. 

Property investors locking-in their gains while rental yields are ‘historically’ high

Market activity suggests that many of Australia’s property investors don’t expect the current highs to last.

In his latest insights report, REA economist Paul Ryan found that while 2021 has seen more investors enter the market, “this trend has been far outweighed by the number of investors cashing in on strong market conditions and heading for the exit”.

Citing analysis done by realestate.com.au, Mr Ryan found that 27 per cent of properties sold in June 2021 had been previously listed for rent.

He suggested that this data is indicative of many property investors selling their assets in order to lock-in the gains achieved over the past year.

Advertisement
Advertisement

Mr Ryan said that “strong recent conditions may have been what investors have been waiting for to sell”.

While the share of new purchases by investors began to increase again in 2020, it remains at a low point relative to the past few years.

Mr Ryan attributed the gradual decline seen in the level of purchases made by property investors to new measures introduced by APRA in late 2014.

However, he added that, due to the limitations in how the level of investor activity in the market is identified, “the investor share of recent purchases is likely to be understated”.

Still, Mr Ryan emphasised that “the recent trend of investors heading for the exit has been occurring” alongside “historically quite high” yields for residential property.

Speculating that “spreads are not likely to remain this high for an extended period”, he pointed to time pressure as one of the forces pushing investors to sell.

Mr Ryan said that while price growth is likely to continue into the foreseeable future, he said that there’s little pressure for rents to keep up.

“New investor activity looks set to continue its growth in the second half of 2021, as conditions for investors remain favourable. But it will be interesting to track if more existing investors are planning to exit the market in the coming months,” he speculated.

RELATED TERMS

Property

Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable... Read more


Property investors locking-in their gains while rental yields are ‘historically’ high
Property investors locking-in their gains while rental yields are ‘historically’ high
spi logo

Get the latest news & updates

Join a community of over 100,000 property investors.

Check this box to receive podcast updates

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.