Australia’s rental crisis is set to worsen as thousands of property investors exit the market – just as the Federal Treasurer signals potential changes to negative gearing and Capital Gains Tax (CGT) through sweeping tax reforms, according to the Property Investment Professionals of Australia (PIPA).

PIPA analysis of ATO data shows the steepest annual decline in individual property investors in over 25 years – excluding the GFC and COVID – reversing decades of steady growth.

According to ATO statistics for 2022–23, the total number of individual property investors fell by more than 7,000 compared to the previous financial year – a reversal that comes after decades of consistent growth in investor participation.

PIPA Chairman Lachlan Vidler said the data confirms what the association has been tracking for years – investors are being pushed out of the market by mounting costs, regulatory uncertainty, and fears of tax reform.
“This is not just a blip – it’s a structural shift,” Mr Vidler said.

“Investors are selling up, and the homes they leave behind are often snapped up by owner-occupiers, permanently removing them from the rental pool.”

The 2024 PIPA Annual Investor Sentiment Survey found that 14.1% of investors sold at least one property in the previous year, up from 12.1% in 2023. Of those who sold, nearly 65% had held the property for less than 10 years, and almost 20% had owned it for less than three years.

“These are not long-term investors cashing out after decades,” Mr Vidler said. “They’re people who entered the market with good intentions and were forced out by rising costs and policy uncertainty.”

When asked what contributed to their decision to sell in last year’s survey, 44.1% cited increased general holding and compliance costs, while 35.4% pointed to rising land tax and government charges.

But the most alarming finding was the growing fear of federal tax reform, Mr Vidler said.

“Nearly half of all investors – 44% – said the future risk of changes to negative gearing or CGT would influence their decision to sell. That’s a flashing red light for policymakers,” he said.

The survey also revealed that government interference in the rental market was the number one concern for current and prospective investors.

“All investors want is clarity and consistency – they can’t plan for the future when the rules keep changing,” Mr Vidler said.

“They want to know that the rules won’t change halfway through the game.”

Mr Vidler said the consequences of the investor retreat are already being felt with rental vacancy rates remaining critically low around the nation.

“Yet, instead of supporting the private rental sector, governments are considering policies that will further discourage investment,” he said.

“Why, in the middle of a rental crisis, would anyone think it’s a good idea to dismantle the very policies that underpin rental supply?

“Negative gearing and CGT concessions have helped everyday Australians provide rental housing for decades. Undermining them now is reckless.”

Mr Vidler also criticised the Federal Treasurer for potentially backtracking on the ALP’s election promise not to touch negative gearing or CGT.

“The Prime Minister has recently indicated that no changes to the two policies are mooted, however, the Treasurer appears to be saying otherwise – no wonder investors are confused and increasingly selling up,” he said.

With population growth outpacing new rental supply, PIPA is calling on the government to reaffirm their support for property investors and maintain longstanding tax policies that encourage investment.

“We need more rental properties, not fewer,” Mr Vidler said. “If the government continues down this path, they’ll find themselves with an even bigger rental crisis on their hands – and fewer people willing to help solve it.”

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