The Melbourne neighbourhoods where property investors are selling

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Key points

  • More than half of City of Melbourne property listings were owned by investors. 
  • Higher mortgage costs mean investors are less likely to hang onto their properties. 
  • Some investors were selling to consolidate debt and put money into their homes. 

Property listings

Melbourne investors are selling their properties at a higher rate than usual, as interest rate rises prompt owners to offload their increasingly expensive investments.

In March, 30.8 per cent of all property listings in Greater Melbourne were owned by investors, up on the 10-year average of 25.2 per cent, CoreLogic figures show.

The City of Melbourne had the highest proportion of investor listings, at 53.5 per cent of all listings, followed by the Yarra, Maribyrnong, Port Phillip, Stonnington and Darebin council areas, which all ranged between 40 per cent and 50 per cent.

The biggest jump was the in the Wyndham council area, where the portion of investors selling was 12.5 per cent more than the long-term average of 38.5 per cent.

Next was Melton, which was 11.4 per cent higher than the long-term average, at 31.6 per cent.

CoreLogic head of Australian research Eliza Owen said investors were offloading properties because of rising interest rates.

“The most obvious reason might be that interest rates for investors are inherently higher than they are for owner-occupiers,” she said. “[Interest costs] have gone up faster than rents even though rents have gone up to record levels. This may prompt investors to sell.”

Owen said investors who weren’t breaking even before the Reserve Bank started hiking rates would have more of an incentive to sell.

“Costs of living are also high, which could add some pressure to balance sheets as well,” she said. “Most investors are negatively geared anyway. The current period is exacerbating the losses investors would be copping.”

Investment property owners Rebecca Jarvie and Eddy Blatt are selling what was once their family home, a two-bedroom apartment in Bay Street, Port Melbourne.

Rebecca Jarvie and Eddy Blatt at their apartment in Port Melbourne. Credit: Eddie Jim

The couple had rented it out for the past 12 months while waiting for their new home to be built. As the project nears completion, the prospect of having two mortgages while rates were high wasn’t particularly attractive, Jarvie said.

“When we moved out we hadn’t really thought a great deal about selling it. The building that we’ve bought into hadn’t started being built at that point,” she said. “We were keeping that apartment as a backstop in case we had to move back into it.

“We had to make a decision right about now, when the tenant was due to re-lease or move out, and we said let’s bite the bullet now, so we’re not in a tricky situation with two mortgages later.”

The couple said they were happy to sell now as the property market was showing signs of stabilising and that their old home stood out from others listed in the area.

“It is quite a unique sort of apartment,” Jarvie said. “First of all, it’s a good time for us to sell it on but also there seems to be a lot of different types of properties for sale in Port Melbourne, and we thought we’d give it a go.”

BigginScott Port Melbourne listing agent Fraser Lack said investors were selling, and owner-occupiers were replacing them.

“I think realistically [Jarvie and Blatt’s home] will go to an owner-occupier, because of the price point and the premium nature of the apartment,” he said. “I think the person who will pay the premium will be someone who will want to live there themselves.

“Looking back on the past 17 sales at our office, they all were sold to people who wanted to use them as their residence instead of an investment vehicle.”

Ray White Werribee principal Michelle Chick sells in the Wyndham region, and said her investor clients were selling because they could no longer afford the mortgages.

“The increase in interest rates and the cost of living has put a lot of pressure on families,” she said. “So they’re just selling off a property or two in order to keep the family home.

“One of my sellers who is going on market tomorrow, they have three investment properties plus the family home. She has a young baby and doesn’t want to go back to work, so she’s freeing up some money, so she can stay at home.

“Before the interest rate rise, she could stay at home.”

Chick said it was frustrating for investors.

“It’s quite a difficult decision because they’ve worked hard to get those properties and now after all these increases they have to sell,” she said. “They feel just as though they’re going backwards.”

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