Property investors are stepping back from major housing markets ahead of potential changes to capital gains tax and negative gearing, tightening rental supply and reshaping the pipeline of investor loans, The Daily Telegraph reports.
New data from real estate analytics firm FoundIt shows a sharp fall in recent investor buying across Sydney, Brisbane, and Perth, measured by the number of properties purchased by investors and then listed for rent.
In parts of Greater Sydney, new rental supply over the past quarter fell more than 15% compared with the same period in 2025, while investor purchases across the city overall dropped 8.4%. The steepest declines were seen in the Hills District, where new rental supply dropped 17%, and the Inner West and Parramatta, both down 15%.
Greater Perth recorded a 36% annual decline in investor spending and Greater Brisbane about 22%, contributing to a nationwide 7.5% fall in new investor‑owned stock. In Perth, many areas saw sales to investors fall by around 40%, with Perth–South East listings down 41.2%, while Brisbane Inner City investor‑held listings slid 31.1% and Townsville plunged 43.6%.
“Investors are getting cold feet,” pointing to global uncertainty, higher interest rates and concern over what form policy changes will take,” FoundIt head of research Kent Lardner (pictured left) said.
Lardner noted that while “veteran investors, the ones with a high net worth are still buying”, “it’s the ma and pa investor that is sitting on their hands.”
The retreat is colliding with strong population growth and limited new construction. A slowdown in new rental listings is already showing up in tighter vacancy rates and faster rent growth.
SQM Research data shows Sydney’s vacancy rate has slipped to 1.1%, signalling a highly competitive rental market. City rents are up 7.4% over the year, roughly double inflation, on top of nearly 40% growth between 2022 and 2025. Annual rent increases in Perth and Brisbane sit just under 7%.
Lardner warned that “as investor (spending) has dropped, it’s renters that are paying the cost,” and cautioned that if the government proceeds with capital gains tax reforms, rents are “likely” to stay well above inflation.
That risk is front of mind as Treasurer Jim Chalmers finalises the next budget, with housing policy being set in a highly charged fiscal climate. Ray White chief economist Nerida Conisbee argues affordability hinges on “the ability to deliver housing at scale” and warns “we don’t have a backup system for rental housing”.
Not all markets are cooling. Victoria stands out as a rare bright spot for investor activity, with purchases over the March quarter 8.2% higher than a year earlier. FoundIt data shows Latrobe–Gippsland investor‑held listings jumping 103.3%, while Melbourne‑West recorded a 28.7% rise as investors targeted more affordable growth corridors.
While many landlords are pausing, some see opportunity.
Rethink Investing director Scott O’Neill (pictured right) told The Daily Telegraph that residential opportunities are “cooked” given possible tax changes.
“Trying to make money or build a nest egg for retirement with multiple houses won’t be as effective anymore,” O’Neill said, arguing that “investors will need to turn to other (assets) like commercial real estate where there are fewer restrictions.”
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