Despite Sydney rents reaching record highs,many investment properties no longer stack up as well,Owen said.
“From a rental income perspective,investment properties don’t stack up as well as they did when rates were at a record low. That might be prompting these investor sales,” she said.
Most council areas recorded an above-average share of investment properties hitting the market,not just apartment-heavy suburbs,pointing to a broad-based trend in the financial pain felt by investors,Owen said.
“Households would be feeling the squeeze,especially those with multiple mortgages. Some would be looking to shed their cost burden.”
St George chief economist Besa Deda said while Sydney’s property market was finding its bottom,significant headwinds still lay ahead,including the potential for further rate hikes and a big share of households rolling off low fixed-rate mortgages.
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“As an investor,if you’re facing higher mortgage rates with the possibility of higher rates yet,they may be more likely to offload that property,more so than an owner-occupier,” Deda said.
While some households are pulling back on spending,as their mortgage and the cost of living climbs,others will be making more dramatic changes.
“There will be households who are feeling adverse impacts on their budgets and for some households it will mean selling that[investment] property,” Deda said.
For investor Jesse Ferreira,selling her Dulwich Hill unit will help her family stay ahead as they look to redevelop their own home amid rising costs.
“We’re hoping to sell,so we can knock down our house and build duplexes,that’s another investment for us,” Ferreira said.
Property owner Jesse Ferreira is selling her apartment in Dulwich Hill to help with the costs of her primary home.Credit:Kate Geraghty
“It will help us,so we can use the money from the sale to build. Maybe we could have worked out a way to keep it,but we sat back and thought it’s done its job. I’ve had it for 10 years. I bought it by myself,it’s time for the next chapter.”
While the rent covered the mortgage repayments on the investment,the sale will help with the rising costs of their primary home.
“It will help us stay comfortable,not struggling to keep everything afloat.”
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Her selling agent,Jessica Carbone of Ray White Drummoyne,said many investors were offloading properties to reduce their debt.
“It comes down to freeing up that debt that people might have and looking at alternatives and consolidating what they have at the moment and moving on from these properties that they’ve had for quite some time,” Carbone said.
Meanwhile,there was also a cohort of investors who were losing money on their properties due to rising costs on all fronts,including levies,council and water rates,she said.
“You’re probably starting to see more investors than owner occupiers selling,” she said.
“What they’re achieving in rents is not covering what they have to put in these investment properties.”