Australiaโs rental market faces mounting strain as new data reveals a growing number of property investors are selling up, exacerbating an already fragile rental supply.
The Property Investment Professionals of Australia (PIPA) says fresh analysis of Australian Taxation Office data shows the steepest annual decline in individual property investors in more than 25 years, outside the global financial crisis and the COVID-19 pandemic.
According to the figures, more than 7,000 investors exited the market in 2022โ23 compared with the previous year, reversing decades of steady growth in investor participation.
PIPA chairman Lachlan Vidler said the numbers confirmed what the association had been warning for years: that mounting costs, regulatory uncertainty and fears of federal tax reform were driving investors out.
โThis is not just a blip โ itโs a structural shift,โ Mr Vidler said.
โInvestors are selling up, and the homes they leave behind are often snapped up by owner-occupiers, permanently removing them from the rental poolโ.
PIPAโs 2024 Annual Investor Sentiment Survey found that 14.1 per cent of investors sold at least one property in the previous year, up from 12.1 per cent in 2023.
Nearly two-thirds of those who sold had owned the property for less than 10 years, and almost one in five had held it for under three years.
When asked why they sold, 44.1 per cent cited higher compliance and holding costs, while 35.4 per cent pointed to land tax and government charges.
The most pressing concern, however, was tax reform: 44 per cent of investors said the risk of changes to negative gearing or capital gains tax would influence their decision to sell.
Mr Vidler said the governmentโs mixed messaging had compounded the uncertainty, with the Prime Minister stating that no changes to the tax concessions were under consideration, while the Treasurer had appeared to leave the door open.
โNo wonder investors are confused and increasingly selling up,โ he said.
With rental vacancy rates still critically low nationwide and population growth outpacing new supply, PIPA is urging the federal government to rule out changes to long-standing tax policies.
โWe need more rental properties, not fewer,โ Mr Vidler said.
โIf the government continues down this path, theyโll find themselves with an even bigger rental crisis on their hands โ and fewer people willing to help solve itโ.