Rental Crisis Worsens As More Investors Exit The Market

2025 PIPA Investor Survey

OPINION PIECE

Australia’s rental market is under mounting pressure as a record number of property investors exit the sector, driven by rising costs, legislative uncertainty, and concerns over proposed federal tax reforms.

The 2025 Annual Property Investor Sentiment Survey, released today by the Property Investment Professionals of Australia (PIPA), shows that 16.7 per cent of investors sold at least one property in the past year – up from 14.1 per cent last year and 12.1 per cent in 2023.

This marks the highest rate of investor sales since the question was first introduced in the survey in 2022. At that time, about 17 per cent of investors indicated they had sold at least one investment property in the previous two years – or 8.5 per cent annually.

“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.”

Rental stock shrinking
Only 42 per cent of properties sold remained in the rental pool because they were bought by other investors. Meanwhile, 37 per cent were purchased by owner-occupiers and 25 per cent by first-home buyers, effectively removing them from rental circulation.

“This shift is structural, not temporary,” Mr 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.”

State-by-state breakdown
Queensland continues to lead the nation in investor exits, with 35.5 per cent of respondents selling at least one property in the state – up from 33.4 per cent last year. Victoria followed at 30 per cent, while New South Wales saw a sharp decline to 11.8 per cent, down from 25.4 per cent in 2024.

Investor sentiment deteriorating
The survey highlights a growing unease among investors, particularly around proposed federal reforms.

When asked whether they would continue investing in property if negative gearing was altered, 53 per cent said they would stop investing. An additional 25 per cent were unsure, leaving just 22 per cent willing to continue.

Similarly, if the CGT discount were reduced to 25 per cent after 12 months of ownership, 35 per cent of investors said they would exit the market. Another 29 per cent remained undecided and 36 per cent said they would continue investing.

“These figures show a clear erosion of confidence,” Mr 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.”

Rising costs and selling pressure
The top reasons for selling included reducing overall debt exposure (41.7 per cent), rising holding and compliance costs (40.4 per cent), and increased land tax and government charges (32.9 per cent).

Operational costs also continue to climb. This year, 39 per cent of investors reported increases of between 11 and 20 per cent, compared to 34 per cent last year. More than 21 per cent said costs had risen by 21 to 41 per cent.

Despite these pressures, most investors are absorbing costs. A full 65 per cent said they had passed on just 10 per cent or less of their increased costs through rent hikes.

“This shows the resilience and responsibility of Australia’s property investors,” Mr 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 sentiment around selling is also intensifying. This year, 36 per cent of respondents said it was a good time to sell – up from 29 per cent last year. The future risk of federal reforms was the top reason (51.3 per cent), followed by compliance costs and land tax.

A fragile optimism
Despite the challenges, nearly 60 per cent of investors believe the next 12 months is a good time to invest in residential property – down slightly from 63 per cent last year.

“There’s still belief in the fundamentals of property investment, but that belief is more fragile,” Mr 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.”

PIPA Chair Lachlan Vidler. Photo supplied

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