Many Australian property investors are struggling to keep pace with soaring mortgage repayments and are concerned about what financially lies ahead for them with interest rates at the highest level in more than a decade.
This was according to a survey of Property Investors Council of Australia (PICA) members, which saw dozens of investors outlining their increasingly precarious financial situation amid skyrocketing costs, with Queensland investors now also worried about the threat of rent caps being rolled out.
PICA Chair Ben Kingsley (pictured above left) said the rent cap threat was proving a bridge too far for many and showed the Queensland government failed to understand the basics of supply and demand.
“Those tenancy groups, and now the state government, who are lobbying for a rent cap, or freeze, are claiming some sort of market failure is the reason why. Well, we want to know from them, how is reducing investor demand and rental housing supply going to improve the situation for Queenslanders?” Kingsley said.
“New arrivals to Queensland try before they buy, meaning they rent, but if there are no rental properties, because no investors can trust the government to allow a free market to operate, these new arrivals won’t have anywhere to live, business won’t be able to employ staff, and the Queensland economy and its citizens will ultimately be the biggest losers.
“Another question that needs to be asked is: ‘What does the government believe is an ‘acceptable’ percentage of cost increases that a landlord should be able to pass on to tenants?’ Are they insinuating that costs can be uncapped but income must be capped?”
According to CoreLogic data, average monthly rental prices have jumped by $290 over the past year, but repayments on a $500,000 mortgage have risen by more than $800 per month over the same period.
Nicola McDougall (pictured above right), chair of the Property Investment Professionals of Australia (PIPA), said it seemed the state government hadn’t learned anything from the “ridiculous” interstate Queensland land tax, which was axed just less than six months ago.
“This knee-jerk policy position was clearly in response to the QCOSS report that showed homelessness in Queensland rose by 22% in the four years to 2021-22 compared with just 8% across Australia,” McDougall said. “PIPA research last year also showed 160,000 rental properties had been stripped from Queensland markets in just two years – with even more investors set to sell if rental caps are introduced.
“Without any meaningful solutions by the state government to increase rental supply in the Sunshine State – and therefore stablise rents – the premier will likely go down in history as the leader who forced more Queenslanders into homelessness than ever before.”
Below are a couple of comments from the study, which according to PICA showed that investors were far from the “greedy landlords” that seemed to be “the common, and only, narrative from the Queensland government and tenancy lobbyists.”
Lauren: “I have had a Brisbane property since Feb 2020 with lovely tenants who are pensioners. I have kept the rents low as they look after the property really well, and I feel they deserve to be rewarded. This renewal period I have again provided them with a discount to market as a show of good faith for being great tenants.
“I have raised the rents and haven’t been greedy, knowing that they would have little choice but to sign the renewal given there was no comparable properties in the area remotely in their price range. It is not our fault as landlords that supply, and demand economics are at play here.”
Marcus: “The land tax alone went up 25% on my investment properties in the 21/22 financial year, and I just received the latest land tax assessments and they have gone up again between 18% and 35%.
“I’m very mindful of trying to keep the rent affordable for my tenants and I have only just put up the rent to one property by 10%. Some tenants are still paying the same rent from years ago. I haven’t even mentioned the increase in my mortgage repayments… which have doubled in the past year.
“To call me a greedy landlord is far from the truth. I’d rather be a tenant at the moment.”
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