[Podcast] Property Investment has lost its appeal, with Nicola McDougall

Property investment has lost its appeal for 45% of Queensland investors, according to the latest Property Investor Sentiment Survey by PIPA.

The survey found many investors are selling up, and quite a few feel they are longer in control of their assets.

I'm sure you'll still find my chat with Nicola McDougall, Chair of the Property Investment Professionals of Australia interesting, especially as you compare yourself with what other Australian investors are planning to do.

Highlights from my chat with Nicola McDougall

Each year the Property Investment Professionals of Australia run their property investor sentiment survey to get a snapshot of the nation’s property investor community.

While there are a lot of factors driving our property markets, such as interest rates, inflation, supply and demand, the flow of money, etc, one of the biggest factors driving our market is consumer sentiment – how confident home buyers and investors feel.

And boy, has that changed over the last year!

So, to get more details and insights from this survey, I’m pleased to have as my guest today Nicola McDougall, chair of PIPA:

• The biggest surprise from this year's survey
  • 58% of investors believe now is a good time to invest in residential property, down from 62% in 2021 and 67% in 2020
• 7% of investors have sold at least one property over the two-year period, which reflects a potential drop in the rental supply of 10 per cent, or about 269,000 dwellings, given about 65% of these were bought by owner-occupiers.
• Why are investors selling up?
  • New Land Tax legislation, changes in tenancy legislation, the threat of losing control, the threat of rental freeze
• 56% of investors suggest metropolitan markets are offering the best investment prospects, 23% regional markets and coastal locations falling to 15% from 22% last year
• Investors desert Queensland
  • Nearly 30% of rental dwellings have been stripped from the Queensland market in two years
  • The survey found that a staggering 45.1 per cent of investors had sold at least one property in the Sunshine State in two years
  • Further independent analysis of the data found that nearly two-thirds (65%) of all investment dwellings were bought by owner-occupiers over the period
• What’s ahead, considering poor investor sentiment?
  • 19% of investors nationwide have signalled they intend to sell even more property over the year ahead
• “The fact that 45.1% of investors sold at least one property in Queensland is mindblowing – especially since this was mostly a period when the ridiculous new land tax wasn’t even law.”
• Over the past two years, investment activity had been below historical averages
• With nearly 269,000 former rental dwellings potentially being bought by homebuyers nationwide, she said it was clear this was one of the main reasons why there is such a critical undersupply of properties available for rent.

Other comments:

“That said, even with the strong market conditions last year, after all the costs, including Capital Gains Tax that I paid over the 15 years I owned a property in a Brisbane middle-ring suburb, I would have been better off financially driving an Uber in my spare time."

The survey found that 45.1% of investors sold a property or properties in Queensland – the number one location by a long stretch – followed by New South Wales at 24.1% and Victoria at 19.1% over the two years to August.

More pain to come

In a sign of more rental stress for tenants to come, the survey found that about 19% of investors are considering selling in the next 12 months, which could potentially deplete the supply of rental properties around the nation by another 200,000 properties, especially if investment buying activity remains low.

Tellingly, the number one reason why investors may sell their property over the year ahead is because of the Queensland land tax, Ms McDougall said.

Ms McDougall said PIPA has been warning about the potential rental undersupply for five years now, but governments had repeatedly refused to listen.

“When we warned about the potential impact of lending restrictions on rental supply back in 2017, no one took any notice, and when we started highlighting the looming rental undersupply some two years ago, again, we were ignored as real estate zealots,” she said.

“It is clear that investors are sick and tired of being treated appallingly by policymakers who continually believe that they are an endless supply of revenue for their coffers.”

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Nicola McDougal’s  Book - The female Investor

PIPA Annual Property Investor Sentiment Survey 2022

Some of our favourite quotes from the show:

“In the future, your income’s going to be dependent on the ability of your tenants to pay higher rents.” –Michael Yardney

“If selling your property is part of your plan, fine, but if not, why do it?” – Michael Yardney

“When you read or think about negative things you can’t control, it leads to long-term stress because you can’t change the outcome of those negative things.” – Michael Yardney

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