By Eliza Owen, Head of Research

Australian rent values have increased 24.1% between the start of an upswing in September 2020, to February 2023.

On the surface, it would appear to be the perfect storm for property investors. The pace of monthly rent increases is accelerating, the monthly vacancy rate nationally slipped back to 1.0% in February, and the count of rental listings on the market sank to around 96,000 over the past four weeks, down from a previous five-year average for this time of year of 150,000.

So, if rental income is rising and there is no shortage of potential tenants, why are investors shying away from the real estate market?

Investment purchases are declining
The number of investors buying dwellings has been falling since early 2022. Figure 1 shows the monthly number of loans secured for investment property purchases, which peaked at 21,663 in March 2022. As of January 2023, the volume of new investment loans had fallen around 47% to 11,485. The decline to January is compounded by a seasonal drop in sales, but the downward trend since March suggests waning investor interest in Australian real estate.

Eliza Owen has crunched the numbers to find out why there’s been a 47% drop in the number of monthly investment loans in January 2023 and what this means for the Australian rental market.