PIPA says uncertainty over CGT and negative gearing could prompt more investor exits, tightening rental supply
Tax reform speculation risks accelerating Australia’s rental crisis as investor confidence falters, according to the Property Investment Professionals of Australia (PIPA), which has urged the federal government to maintain stability around capital gains tax (CGT) and negative gearing settings to avoid further constraining rental supply.
PIPA said private investors remain central to the country’s rental stock, at a time when vacancy rates are low and demand is being fuelled by population growth that is running ahead of housing completions.
The group argued that any changes to investor tax treatment should be designed to support new supply and longer holding periods, rather than discourage participation in the rental market.
“Investors have quietly carried the weight of Australia’s rental supply for generations,” said Cate Bakos (pictured right), chair of the Property Investment Professionals of Australia. “Any policy shift that undermines their confidence risks shrinking the pool of available homes at the very moment renters can least afford it.
PIPA pointed to results from its latest Investor Sentiment Survey, which it said indicated a heightened sensitivity to policy signals.
Among investors who sold property in the previous year, nearly one in five cited concerns about potential federal tax changes as a reason for selling, the association said. It added that more than half of current investors reported that uncertainty about tax settings was a factor that could prompt them to sell within the next 12 to 24 months.
PIPA also said around one-third of respondents would stop investing if CGT concessions were reduced, while a similar share indicated they would sell if negative gearing were removed. More than half of those who sold in the last year had held their investment for more than a decade, according to the survey findings.
“Long-term investors are already leaving the market because they no longer feel it’s financially feasible,” Bakos said. “If that trend accelerates, renters will be the ones who suffer.”
The association argued that investors are not the main cause of housing affordability pressures, stating that investors historically represent about one-third of purchasers and that the larger constraints are structural — including a sustained shortage of homes, construction capacity limits, and lower levels of public and social housing investment over decades.
“Blaming investors for price pressures is not just inaccurate – it’s dangerous,” Bakos stressed. “It distracts from the real issues and risks triggering decisions that make the rental crisis even worse.”
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