Investors may be returning to the market but their participation remains below long-term averages, leading to a rental shortage crisis. Analysis by Property Investment Professionals of Australia (PIPA) shows that, while between 2007 and 2017 investors made up about 35% of the property market, in the past four years that has decreased.

PIPA Chairman Peter Koulizos says tighter lending conditions contributed to a reduction of investors which meant there are fewer rental properties available and a further tightening of the rental market.

“The volume of investors has been trending up over the past few months, but the fact that they were generally stuck on the sidelines for a number of years means there is a significant rental property deficit in most parts of the nation,” Koulizos says.

He says the gap between the number of properties available for rent and the number of tenants seeking a property has been increasing since 2017.

With fewer rental properties available in many parts of Australia because of the reduced number of investors, rents are rising.