Rental stock shrinks further as more property investors sell up, survey reveals
Australia’s rental sector is facing increasing strain as a growing number of property investors withdraw from the market, according to the latest annual survey from the Property Investment Professionals of Australia (PIPA).
The 2025 PIPA Investor Sentiment Survey found that 16.7% of investors sold at least one property in the past year, up from 14.1% in 2024 and 12.1% in 2023. This is the highest proportion recorded since the question was introduced in 2022, signalling a trend that could further tighten rental supply nationwide.
“This isn’t just a continuation of last year’s trend – it’s an acceleration,” said Lachlan Vidler (pictured top), chair at PIPA. “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.”
The PIPA survey revealed that only 42% of properties sold by investors remained available for rent, as they were acquired by other investors. In contrast, 37% were purchased by owner-occupiers and 25% by first-home buyers, removing these dwellings from the rental pool.
A shrinking pool of property investors means fewer clients seeking investment loans, potentially reducing business for mortgage brokers. Increased uncertainty and regulatory changes may also prompt more investors to seek professional advice, creating opportunities for brokers who can offer guidance on lending strategies and policy impacts.
“This shift is structural, not temporary,” Vidler said. “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.”
Investor confidence appears to be waning, particularly in response to potential changes to negative gearing and capital gains tax (CGT). Over half of respondents (53%) said they would cease investing in property if negative gearing rules were altered, while a further 25% were uncertain. Only 22% indicated they would continue under revised conditions. Similarly, 35% said they would exit the market if the CGT discount was reduced, with 29% undecided.
“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 recorded the highest proportion of investor sales, with 35.5% of respondents selling property in the state, up from 33.4% last year. Victoria followed at 30%, while New South Wales saw a sharp decline to 11.8%. At the city level, Melbourne and Brisbane both saw increases in investor sales, while Sydney and Perth experienced contrasting trends.
“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 primary reasons for selling included reducing debt (41.7%), higher holding and compliance costs (40.4%), and increased land tax and government charges (32.9%). Operational costs have continued to rise, with 39% of investors reporting increases between 11% and 20%, and more than one in five citing cost rises of 21% to 41%. Despite this, 65% said they had passed on just 10% or less of these increases to tenants.
“This shows the resilience and responsibility of Australia’s property investors,” Vidler said. “They’re doing their best to shield tenants from rising costs, but there’s a limit. Without meaningful support, many will be forced to reconsider their position.”
Investor awareness of state-level tenancy reforms remains low. Sixty-four percent of investors were unaware of Victoria’s new vacant residential land tax, and 60% had only moderate or limited knowledge of tenancy law changes across the country. Ten percent said they had never received any communication from their state or territory government.
Selling pressure is mounting, with 36% of respondents believing it is a good time to sell, up from 29% last year. The main reasons for considering a sale in the next one to two years included the risk of federal reforms (51.3%), increased compliance costs (49.8%), and higher land tax and government charges (49.8%).
Despite these challenges, nearly 60% of investors still view the coming year as a good time to invest in residential property, though this is down from 63% last year.
“There’s still belief in the fundamentals of property investment, but that belief is more fragile,” Vidler said. “If governments want to preserve the integrity of the rental market, they must listen to investors, provide clarity, and avoid knee-jerk reforms that risk doing more harm than good. As Australia grapples with housing affordability and rental shortages, the voice of the investor has never been more critical.”
Melbourne was identified as the most attractive location for investment by 41% of respondents, a significant increase from 26.3% last year. Brisbane remained steady at 16.5%, while Perth’s popularity declined. Regional Queensland, New South Wales, and Victoria also attracted interest, with investors citing yield, affordability, and lifestyle as key factors.
Support for professional standards in property investment remains high, with 94% of respondents believing that advisors should have formal training or education.
“Professionalism matters,” said Vidler. “In a market this complex, investors need trusted advisors who understand the landscape and can help them navigate it.”
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