Why Australia needs more property investors right now
Australia is grappling with a critical shortage of property investors, according to new research from the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA). This alarming shortfall is further straining the nation’s rental housing market, leaving renters with fewer options in an already overstretched market.
The research highlights that from March 2019 to March 2024, Australia’s population grew by 1.8 million people, requiring around 212,000 new rental properties and an additional 145,000 investors to accommodate these new households
However, the market has fallen short by nearly 35,000 investors during this time, resulting in a severe supply gap. This shortage, coupled with surging demand, is placing immense pressure on renters nationwide.
What’s causing the shortage?
PIPA Chair Nicola McDougall attributes the drop in investor activity to increased market interference, restrictive lending policies, tax hikes and new regulations.
Historically, investor numbers grew steadily, keeping track of population growth – for example, between 2003 and 2017, annual increases ranged from 56,000 to 60,000. But over the past five years, this figure has plunged to an average of just 22,300 annually, marking a 60% decline.
How this impacts the rental housing crisis
The effects of fewer property investors are evident in Australia’s rental market.
National vacancy rates have plummeted from around 3% in 2015 to just 1.2% in October 2024. With only 36,000 rental vacancies nationwide – less than half the stock available a decade ago – renters are facing fierce competition for limited housing.
The situation is exacerbated by existing investors selling properties.
According to PIPA’s 2024 Annual Investor Sentiment Survey, 14.1% of respondents sold at least one investment property in the past year, with 65% of these homes purchased by owner-occupiers rather than other investors. This further shrinks the rental stock, leaving tenants with fewer options and driving up rental prices.
How to become a property investor in 2025
If you’re considering becoming a property investor, 2025 could be the ideal time to start.
Despite challenges, property investment remains one of the most effective ways to build long-term wealth.
To get started:
- Educate yourself: Research property markets to help identify areas and properties with high growth potential
- Create a long-term plan: Focus on properties with strong rental yields and capital growth potential.
- Get your finances in order: Consult a finance broker to assess your borrowing capacity.
- Build a team: Partner with professionals such as buyer’s agents, property managers and accountants
Avoid common mistakes
New investors often make these missteps:
- Failing to do due diligence: Always inspect properties and review their rental history before purchasing.
- Over-leveraging: Stick to a budget and factor in potential interest rate increases.
- Ignoring professional advice: Experienced advisors can save you costly mistakes.