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By Eliza Owen

As rates rise and times get tough, property investors opt out of market

key takeaways

Key takeaways

The property market in Australia has shown resilience due to a significant supply and demand deficit. New listings added to the market in May were 20% below the previous decade's monthly average across the country.

The "months of supply" ratio, which measures the time it would take to deplete stock based on the current rate of home sales, fell to 1.8 months in May. This indicates a shortage of available properties in the market.

While overall listings trend shows a decline, investor behavior differs. New investor listings in May were only 2.9% lower than the previous decade's monthly average. In Sydney, Melbourne, and Perth, investor listings were actually higher than the previous decade's average.

The proportion of investor listings has significantly increased in inner city areas, which are traditional hotspots for multiple property owners. For example, the 'City and Inner South' market in Sydney had a historical 10-year average of 38% investor listings, which surged to 57% in May.

There’s been plenty of attention on the supply and demand deficit contributing to the Australian property market’s resilience.

As of May, new listings added to the market were -20% below the previous decade's monthly average across Australia and the ‘months of supply’ ratio, which measures the amount of time it would take to deplete stock based on the current rate of home sales, fell to 1.8 months in May.


Interestingly though there’s a stark difference between the market’s overall listings trend and investor behaviour, CoreLogic infers which listings are investor-owned based on the rental history of a property.

Based on these estimates, new investor listings brought to the market over May are only -2.9% lower than the previous decade's monthly average.

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Note: In three capital cities - Sydney, Melbourne and Perth - investor listings for May were actually higher than the previous decade's average.

At a more granular level, the proportion of investor listings on the market in May has shot up in inner city areas, traditional hot spots for multiple property owners.

For example, the SA3 market ‘City and Inner South’ in Sydney has a historical 10-year average of 38% of new listings coming to market from investors.

In May it topped the list of regions with the highest proportion of investment listings, surging to 57%.

This really signifies that investor selling activity is persisting in an environment where owner-occupier selling decisions are waning.

While normalising around historical averages, overall sales volumes could drop off amid a seasonal slowdown and higher interest rates.

This in itself presents some challenges for owner occupiers, who may be dissuaded from purchasing a former investment property because of long lease terms, or the perception that such a property hasn’t been as well maintained.

But under the circumstances, when there’s a lack of supply, buyers may have little option as investment properties represent a greater share of available listings.

It’s also noteworthy that while investor listings have remained elevated – and appear to be on the rise - the share of investment listings overall is still not as high as the record peak in mid-2021, which was marked by a very strong capital growth period.

In the year to July 2021, when the share of investment listings peaked, annual growth in the national CoreLogic Home Value index was 16.1%.
Portion of inferred investor listings by SA4 regional market:

SA4 Region Name

May 2023

Previous 10-year avg.
Greater Sydney City and Inner South 57.0% 38.1%
Greater Sydney Parramatta 47.6% 31.6%
Greater Sydney Eastern Suburbs 43.5% 33.0%
Greater Sydney Inner West 43.2% 33.2%
Greater Sydney Ryde 38.9% 27.9%
Greater Sydney Inner South West 38.2% 25.5%
Greater Sydney South West 34.1% 20.8%
Greater Sydney Blacktown 34.0% 25.6%
Greater Sydney North Sydney and Hornsby 32.4% 28.1%
Greater Sydney Northern Beaches 31.5% 27.2%
Greater Sydney Outer South West 28.4% 21.3%
Greater Sydney Outer West and Blue Mountains 28.1% 23.6%
Greater Sydney Central Coast 23.6% 23.4%
Greater Sydney Sutherland 22.9% 22.0%
Greater Sydney Baulkham Hills and Hawkesbury 22.2% 16.9%
Greater Melbourne Inner 49.3% 40.2%
Greater Melbourne West 34.9% 26.3%
Greater Melbourne Inner South 30.4% 27.5%
Greater Melbourne North East 30.0% 22.2%
Greater Melbourne South East 29.3% 21.9%
Greater Melbourne North West 28.6% 20.4%
Greater Melbourne Inner East 27.2% 25.0%
Greater Melbourne Outer East 22.8% 18.2%
Greater Melbourne Mornington Peninsula 21.0% 20.9%
Greater Brisbane Inner City 42.9% 35.1%
Greater Brisbane North 35.5% 30.7%
Greater Brisbane West 35.2% 26.3%
Greater Brisbane Ipswich 34.4% 30.6%
Greater Brisbane South 31.9% 28.6%
Source: CoreLogic
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Note: Generally, all capital cities except Hobart have a higher portion of investment listings than the historic average.

It’s not clear exactly why investors are selling as individual circumstances would apply to each listing and without asking vendors directly, it’s unknown what the drivers are.

There are of course a few things that might be prompting the sales.

The first driver might be higher interest costs over the course of the year.

Based on average interest rates for investors, we estimate mortgage costs on a $500,000 loan will have increased $860 per month, to $3,213.

While rents have risen at a record pace over the past few years, they generally have not risen as much as mortgage costs on a new loan.


Investors may be looking to offload their investment if the interest burden is becoming too high amid an already high inflationary environment.

Another key driver might be capital growth.

If you look at a city like Perth, where the portion of investment sales surged in mid-2020 and remained high ever since this may reflect investors finally getting some pay-off after a long period of decline in home values for much of the 2010s.

While east-coast cities like Sydney, Melbourne and Brisbane have seen a decline in home values since interest rates started to rise in May last year, Perth values have held fairly steady and indeed reached a new record high in May this year.

Not only is the portion of investor listings high, but the volume of new investment listings through May was also 19% higher than the previous decade's average.
Portion of inferred investor listings by SA4 regional market:

SA4 Region Name May 2023 Previous 10-year avg.
Greater Brisbane Moreton Bay - South 31.6% 27.3%
Greater Brisbane Logan - Beaudesert 31.6% 27.1%
Greater Brisbane Moreton Bay - North 24.7% 26.1%
Greater Brisbane Brisbane - East 24.1% 20.7%
Greater Adelaide Adelaide - Central and Hills 33.2% 25.4%
Greater Adelaide Adelaide - West 31.1% 27.6%
Greater Adelaide Adelaide - North 25.4% 24.8%
Greater Adelaide Adelaide - South 23.5% 23.6%
Greater Perth Perth - Inner 47.5% 36.2%
Greater Perth Perth - North West 35.3% 23.0%
Greater Perth Perth - South East 34.6% 23.3%
Greater Perth Perth - South West 32.6% 23.1%
Greater Perth Perth - North East 30.9% 20.7%
Greater Perth Mandurah 22.9% 19.5%
Greater Darwin Darwin 43.2% 40.0%
Australian Capital Territory Australian Capital Territory 35.8% 26.4%
Greater Hobart Hobart 20.5% 21.1%
Rest of NSW Riverina 32.8% 23.5%
Rest of NSW Central West 32.3% 22.7%
Rest of NSW New England and North West 30.2% 22.8%
Rest of NSW Newcastle and Lake Macquarie 26.3% 22.7%
Rest of NSW Murray 25.7% 22.7%
Rest of NSW Illawarra 24.5% 24.4%
Rest of NSW Coffs Harbour - Grafton 22.5% 23.0%
Rest of NSW Hunter Valley exc Newcastle 21.1% 23.9%
Rest of NSW Richmond - Tweed 21.1% 20.7%
Rest of NSW Mid North Coast 18.9% 17.8%
Rest of NSW Far West and Orana 17.5% 19.0%
Rest of NSW Capital Region 16.8% 16.9%
Rest of NSW Southern Highlands and Shoalhaven 16.7% 17.8%
Rest of Vic. Geelong 24.0% 21.1%
Rest of Vic. Shepparton 23.0% 21.6%
Rest of Vic. North West 22.5% 21.3%
Rest of Vic. Ballarat 22.3% 21.0%
Rest of Vic. Bendigo 20.7% 19.9%
Rest of Vic. Hume 19.9% 20.5%
Rest of Vic. Latrobe - Gippsland 19.0% 19.6%
Rest of Vic. Warrnambool and South West 17.4% 19.2%
Rest of Qld Townsville 39.3% 30.3%
Rest of Qld Mackay - Isaac - Whitsunday 37.9% 31.5%
Rest of Qld Central Queensland 35.0% 31.1%
Rest of Qld Darling Downs - Maranoa 28.8% 23.9%
Rest of Qld Toowoomba 27.9% 24.8%
Rest of Qld Cairns 26.9% 25.7%
Rest of Qld Gold Coast 23.8% 26.4%
Rest of Qld Queensland - Outback 22.8% 24.1%
Rest of Qld Sunshine Coast 20.5% 22.6%
Rest of Qld Wide Bay 19.4% 21.0%
Rest of SA South Australia - Outback 31.5% 25.5%
Rest of SA South Australia - South East 16.9% 18.2%
Rest of SA Barossa - Yorke - Mid North 14.2% 13.9%
Rest of WA Western Australia - Outback (North) 38.4% 41.9%
Rest of WA Western Australia - Outback (South) 31.6% 24.4%
Rest of WA Bunbury 22.2% 19.9%
Rest of WA Western Australia - Wheat Belt 16.7% 14.8%
Rest of Tas. Launceston and North East 18.6% 19.7%
Rest of Tas. West and North West 16.2% 18.5%
Rest of Tas. South East 6.5% 8.4%
Rest of NT Northern Territory - Outback 32.7% 32.5%
Source: CoreLogic

About Eliza Owen Eliza is head Of Residential Research Australia for Corelogic and a respected property market commentator. Eliza holds a first class honours degree in economics from the University of Sydney
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