Property investors are increasingly exiting the rental market, with new data showing a sharp rise in investment property sales over the past year.
According to the 2024 PIPA Annual Investor Sentiment Survey, 14.1% of investors sold at least one property in the last year, up from 12.1% the previous year, as rising costs and taxes take their toll.
Homebuyers replacing investors, reducing rental supply
PIPA Chair Nicola McDougall (pictured above) noted that most of these properties are being snapped up by homeowners rather than new investors, further depleting the rental market.
“These properties are predominantly being purchased by home buyers, which means fewer and fewer rental properties are available to lease by tenants,” McDougall said.
The survey revealed that 65% of former rental properties were bought by homeowners, with only 31% purchased by other investors.
The PIPA survey found that rising holding costs and new property taxes are major factors driving investors to sell. Nearly 65% of those who sold had owned their properties for less than 10 years, with 20% selling within just three years.
Key reasons for selling included increased holding and compliance costs (44.1%), higher land taxes or government charges (35.4%), and efforts to reduce overall debt exposure (32.9%).
McDougall warned that the ongoing exodus of investors could further tighten the rental market, leading to fewer properties available for lease.
Investor sentiment has taken a hit, with only 45% of respondents believing it is a good time to invest in residential property, down from 55% last year.
Government interference in the rental market was a top concern, with 86.8% of investors citing it as a significant threat to their strategies.
McDougall called on governments to reconsider their approach to rental reforms and property taxes, warning that continued intervention could worsen the rental crisis.
“The continual changing of the goal posts by various levels of government – masquerading as tenant-friendly policies – is continuing to negatively impact property investment sentiment as well as rental housing supply,” the PIPA leader said.
Investors are urging for a more balanced approach that considers the impacts on rental housing availability.
The story was originally published in Elite Agent on Sept. 13. The story can also be accessed on the PIPA website.
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