Fresh Allianz data showed that many suburbs with affordable housing and higher rental returns also had elevated levels of landlord insurance claims across New South Wales, Victoria, Queensland, and South Australia.
Tenants in these areas were found to be more likely to default on rent, cause property damage, or face frequent natural disaster risks.
Nathan Birch (pictured), director of property management firm Blink, said these areas often still delivered strong returns for owners despite the risks.
“They tend to outperform the market,” Birch told news.com.au. “You may pay more in repairs, but the owner can make more when they sell. It’s not a (clear cut) thing.”
Across the board, Allianz reported that the most common landlord insurance claims were for storm damage, burst pipes, malicious damage, and lost rent.
Victorian landlords are grappling with a surge in claims, particularly in investor-heavy suburbs such as Hoppers Crossing and Frankston.
Allianz said that unpaid rent is among the top reasons for claims in the state, exacerbating the exodus of landlords, according to separate Ray White data.
Ben Kingsley, director of the Property Investors Council of Australia, said the trend reflected economic pressures in more affordable areas.
“Government (is) choking the private rental investor out of this market,” Kingsley told news.com.au.
He warned that tougher rental protections had made it harder to move non-paying tenants on, prompting many investors to sell rather than manage escalating risks.
In New South Wales, cheaper Western Sydney and regional areas dominated Allianz’s list of riskiest suburbs for landlords.
Suburbs undergoing gentrification and areas with older housing stock recorded higher insurance claims, while still offering attractive yields.
Finder insurance expert Tim Bennett said turnover and socioeconomic pressures were major factors behind the rising claims.
“Socioeconomic factors can play a role,” Bennett told news.com.au. “Places experiencing economic stress may see more incidents of missed rent repayments or tenant-related damage.”
He added that older properties often carried “hidden risks” leading to more expensive claims.
In South Australia, many of the suburbs flagged for high landlord insurance claims were previously featured on property investment hotspot lists.
Four of the top five suburbs flagged by Allianz were located in Adelaide’s northeast — areas that have seen strong investor interest for their low buy-in prices and positive cashflow opportunities.
Wayne Johnson, EBM Property Insurance SA state manager, pointed to rent defaults as the leading issue.
“The main areas of concern in those places is rent default,” Johnson told news.com.au. “Then there’s tenant damage and then there’s legal liability, where the tenant hurts themselves, or worse.”
He noted that suburbs like Elizabeth had seen socioeconomic decline following the closure of major employers like Holden.
In Queensland, cyclone-related claims ranked among the top five most common claims, Allianz reported.
In Brisbane, however, the biggest issues were rent arrears and increased claims in outer suburbs with more affordable housing.
Bold Property Management director Alison Farrell said lower-cost rentals experienced the most insurance claims.
“We see more claims in low-to-mid-range rentals in outer suburbs,” Farrell told news.com.au.
“Higher income tenants will not rent in lower socio-economic areas generally, so landlords can only select from applicants that actually apply. The pool is what the pool is.”
Ray White Collective Principal Haesley Cush noted that houses tend to attract more claims than units, particularly due to weather-related damages.
“Since 2011, we’ve also faced a number of weather events that have contributed to the number of landlord insurance claims,” Cush said.
