Interstate investors sparking 'astronomical' house sales in Alice Springs

Interstate buyers have been snapping up housing in Alice Springs, looking to capitalise off high rental yields in the outback town, since the federal government removed negative gearing benefits.

First National Real Estate Alice Springs principal Eli Melky said investors from Melbourne and Sydney were looking for houses between $400,000 to $500,000 and buying them sight unseen within 24 hours of them going on sale.

"The higher rents is what they're looking for, they're not able to capitalise on negative gearing anymore," he said.

"They've come in for that high return on rental and Alice Springs is one of the best in Australia.

"It's almost like Australia woke up one morning and decided that Alice Springs is the best place to invest in property and all of a sudden our figures are astronomical."

Mr Melky said his business had been breaking month to month sales records due to investor demand.

"We have personally sold about 25 houses in the last month, our previous record was five houses per month,"

he said.

Marion Burton, of Marion Burton Real Estate, said interstate investors would have bought about 40 to 50 homes in the first quarter of the financial year, but she anticipated closer to 100 houses would eventually be sold to investors.

"[The demand] is still extremely strong. It doesn't seem to have slowed down at all," she said.

"I've done probably about a year's work in a quarter … for a one person agency with an assistant, that's a lot."

She said investors swooping in had given some local home owners the confidence to sell and made it easier for some to sell.

Why are rental yields so high?

The average weekly rent for a three-bedroom home in Alice Springs is $650, up 31 per cent from 10 years ago.

Meanwhile, the rental vacancy rate in Alice Springs sits at just 1.4 per cent, making it an appealing option for investors, according to Mr Melky.

He said the high demand for rental housing was driven by limited housing stock, in part due to not enough land to build on and high building costs.

"Government needs to have a look at what they can do to assist Alice Springs population growth and stock growth for the rental (market), because that's creating an almighty challenge for incoming people to Alice Springs and it is very difficult," he said.

Impact on local buyers and renters

Ms Burton said though finding rental properties was "extremely hard", investors buying houses to continue renting meant many sitting tenants were able to continue their lease and did not have to find new homes.

"If you're having to move out because a place is sold because an owner-occupier wants to move in — which is usually the first home buyers — then that tenant is out. So with the investors buying it, they're still able to stay in," she said.

NT Shelter chief executive Annie Taylor said rents were already too expensive for many families and having more rentals on the market would not address the underlying issue.

"If you have a finite supply of housing and you simply have that housing change ownership hands, you're not actually doing anything to increase the overall supply of housing," she said.

"We have an absolute housing supply crisis, we need to make sure we have enough housing at an affordable price."

Ms Burton said interstate investors could also be bad news for first home buyers trying to get foot in the door.

"A lot of the first home buyers, they're not familiar with the process, whereas an investor well and truly knows what they're doing," she said.

"They (first home buyers) are definitely going to miss out when they're in competition with someone that's already got their finance."

Mr Melky agreed.

"That's a bit of a concern because locals will be missing out if they're not careful," he said.