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Flight from property investment in SA could create a “generation of homelessness”

| Colin Lee
We were recently featured in InDaily, where Colin Lee has provided expert opinion on the property market. You can view it here.

A property investment advisor believes a dive in new loan numbers could entrench the rental crisis for years to come.

Data released by the ABS last week shows the number of new loans for investment properties in South Australia has fallen by 10.4 per cent over the past year – a trend that’s exacerbating the existing rental crisis according to Inspire Realty’s Colin Lee.

In May 2023, just 1228 new loans for investment properties were secured – a drop of 10.4 per cent compared to May last year.

This compares to a national dive of 17 per cent – from 20,541 investment loans in May 2022 to 16,900 in the same month this year.

Lee said the figures were a worrying sign of things to come.

“The data shows everyday Australian investors are fleeing real estate. We are in for more than a generation of homelessness if something isn’t done soon to address rental undersupply,” Lee said.

“What’s most disturbing is the lead in time for adding new housing supply to the market is years, not months. As such, we need to make decisions now to address future demand for housing which is increasing at an exponential rate.

“While people are calling for our leaders to fix the rental market problem, they don’t have the capacity to build affordable housing. Instead, they need to encourage private investment to pick up the slack.”

The investment advisor attributes the decrease to rising interest rates.

“It does impact the confidence of investors wanting to get into the market. That’s had a huge impact,” he said.

“There is less incentive from governments for mum and dad investors to put more money into investment properties. In fact, I think they’re discouraging.”

He said that in this environment investment property owners had no choice but to increase rents, which would further disenfranchise tenants.

Lee added that investors needed to be incentivised to put more of their money into rental stock, which could be achieved by “improving tax legislation or even offering subsidies for rental property investment”.

“Secondly, improve rent assistance so tenants can be helped without the need for penalising investors,” he said.

“Stop introducing legislation that makes investment less appealing and restrictive.

“Allow for greater use of current land holdings for small scale developments, relaxing restrictions on the minimum lot sizes for building granny flats and adding extra rooms and space to the current home.”

Finally, he wants investors to be invited to the table when discussing accommodation solutions.

“If politicians continue to create policy without asking for investor input, they will never create a viable, long-term solution to homelessness and rental affordability.”

“Rents have to be expensive for us to continue to hold on to the investment property. If we can’t increase the rent, and if we can’t afford to hold it, we’ll just sell it,” he said.

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