Property investors accelerate market exodus as rental crisis worsens
New research has confirmed a “structural shift” in property investment is afoot as the number of investor sales continues its upward year-on-year trajectory, leaving Australia’s rental market very much in crisis.
The Property Investment Professionals of Australia’s (PIPA’s) 2025 Annual Property Investor Sentiment Survey found Australia’s rental housing supply is dwindling at the same time as demand has swelled, with 16.7 per cent of investors selling at least one property in the past 12 months, up from 14.1 per cent in 2024 and 12.1 per cent in 2023.
The survey results indicated that only 42 per cent of properties sold in the last year were purchased by other investors – allowing them to remain in “rentail circulation” – while 37 per cent were purchased by owner-occupiers and 25 per cent by first-home buyers.
“This isn’t just a continuation of last year’s trend – it’s an acceleration,” PIPA Chair, Lachlan Vidler, said.
“We’re seeing a growing number of long-term investors walking away, and the implications for renters are severe. The private rental market is losing stock at a time when demand is surging, and policy uncertainty is only making things worse.
“This shift is structural, not temporary. Once a property leaves the rental market, it rarely returns. We’re watching the slow dismantling of Australia’s rental supply, and tenants are paying the price through rising rents and reduced availability.”
According to the survey, property investors cited “rising costs, legislative uncertainty, and concerns over proposed federal tax reforms” as the most likely reasons for their exit. Approximately 53 per cent of respondents said they would exit the property investment sector if negative gearing changes were to be introduced, and 35 per cent would sell if the capital gains tax (CGT) discount was reduced to 25 per cent after one year of ownership.
“These figures show a clear erosion of confidence,” Vidler said.
“The mere suggestion of changes to negative gearing or CGT is enough to destabilise investor sentiment. These aren’t fringe concerns – they’re mainstream fears held by thousands of everyday Australians who provide rental housing.”
Queensland-based property investors led the charge in market exits with 35.5 per cent of respondents selling up in the last year, closely followed by Victoria (30 per cent). New South Wales experienced a sharp drop in investor sales to 11.8 per cent from 25.4 per cent in 2024. At the other end, Melbourne saw an increase with 22.1 per cent of respondents selling their investment property compared to 18.4 per cent last year, with Brisbane following at 19.7 per cent (up from 16.3 per cent) and Perth at 11 per cent. Much like its state counterpart, Sydney saw a fall from 10.2 per cent last year to 6.3 per cent this year.
“Victoria continues to see elevated levels of investor sales, and it’s no coincidence,” Vidler said.
“The combination of rising land tax, new vacancy levies, and ongoing tenancy reforms is creating a climate of uncertainty.
“Many investors are simply deciding it’s no longer worth the risk or the cost to hold property in the state.”
The change in market trends come as the sector continues to advocate for the implementation of professional standards, with 94 per cent of respondents in support of property investment advisers receiving formal education or training.
“Professionalism matters,” Vidler said.
“In a market this complex, investors need trusted advisors who understand the landscape and can help them navigate it. That’s why PIPA continues to advocate for higher standards and greater transparency across the industry.”
Knock me down with a feather!!
Australian governments used to provide roughly 20,000 new public dwellings in the 1970’s. 50 years ago when the population was 13M. So instead of producing 40,000 pa at 26M population they are barely producing 10% of that number, just 4,000.
But it’s those nasty landlords getting all their evil tax concessions causing high rents, not a complete abdication of responsibility by governments who then go on to blame those greedy landlords???
These same government muppets then go on a legislative and regulatory rampage and now we are wondering why investors are leaving? They are persecuting the only rental provider left standing.
The greens and the left have never been able to manage money or assets as they have not had jobs in the real economy nor ever owned a business nor understand the basics of economic supply and demand.
Birthrate in Australia has been under 2.10 since the 1970’s. Aggregate demand for housing generated by immigration.
This is fine as long as the houses are built…. Which they haven’t been.
Another Canberra masterpiece.
When a rental property leaves the rental market, it is usually because a renter has become an owner occupier. There is a reduction in both the number of rental properties, and the number of renters.
There is ongoing pressure on both the rental market and the owner occupier market, due to immigration far outpacing new home supply. But the rental crisis is not increased or decreased by properties switching from one type of occupant to another, because the market size also changes when that happens.