Almost 20% of investors to sell in 2024: Resolve Finance

A ‘perfect storm’ of regulatory changes and increased interest rates may be impacting investor confidence, research has suggested.

A survey conducted by mortgage brokerage Resolve Finance has found that 19 per cent of investors intend on selling an investment property over the next 12 months and are seeking different investment strategies to keep up with changing market dynamics.

According to Resolve Finance, mum-and-dad investors are reassessing their property portfolios in a climbing rate environment and as regulatory changes for investors come into effect.
Additionally, 9 per cent of respondents said they plan to renovate or “flip” their investment properties.

Furthermore, the brokerage’s research found that 61 per cent of investors intend to “ride out” the higher interest rate environment, continuing to rent to the private market.

Meanwhile, 8 per cent of landlords said they’d hold their properties and continue through an Airbnb model for short-term rentals, while 3 per cent said they’re considering transitioning from long-term private market tenancy to this Airbnb model.

Don Crellin, managing director of Resolve Finance, commented that rising rates and regulatory changes are making it more expensive for investors to access interest-only loans.
Mr Crellin added at the same time, changes in the serviceability assessment will leave “significant proportion of borrowers are likely to have either been unable to refinance” or faced with substantial increases in their repayments.

“With all this in mind, it’s crucial for investors to navigate the lending landscape effectively,” Mr Crellin said.

“Mortgage brokers can play an indispensable role in helping investors access a wide array of lenders and financial opportunities.

“In some cases, brokers can help investors access interest-only refinancing when they have a proven track record of managing repayments as they can demonstrate that a borrower will be in a better financial position under the terms of an interest-only loan.”

Resolve Finance referred to recent data from the Australian Taxation Office (ATO) that found that 2,245,539 Australians (around 20 per cent) of Australia’s 11.4 million taxpayers owned an investment property, while over 30 per cent of the country’s 11 million private residential dwellings are considered to be property investments.

According to the brokerage, investors will have “felt the fallout” of interest rates rising rapidly since May 2022. In addition, the Australian Prudential Regulation Authority (APRA) introduced a benchmark of 30 per cent of new lending under interest only in recent years.

You can read the article in The Adviser here.