The Real Estate Institute of NSW (REINSW) has criticised the NSW Government over its approach to rental market reform, arguing that measures intended to protect tenants are contributing to a reduction in available rental accommodation.
The warning follows the Reserve Bank’s latest interest rate increase, with its November Statement on Monetary Policy highlighting a substantial decline in new lending.
According to figures cited by REINSW, home loans have fallen 27 per cent, with the decline largely driven by reduced lending to property investors.
The Reserve Bank noted that while higher interest rates had affected borrowing across the market, the impact had been particularly pronounced among investors.
“The increase in interest rates over 2026 has weighed on demand from all categories of borrowers, the decline in new lending has been most pronounced for investors,” the RBA said in its November statement.
REINSW Chief Executive Officer Tim McKibbin said the reduction in investor activity was having consequences for tenants already struggling to secure rental accommodation.
“Every anti-landlord reform the NSW Government has introduced has had an adverse impact on tenants in the form of fewer homes to rent and higher rents as a consequence,” Mr McKibbin said.
“Landlords have heard the Government’s message loud and clear. That message is to get out of the market, irrespective of the impact this has on tenants.
“As investors increasingly choose to sell their homes, land bank their properties or choose the short-term accommodation market, tenants are left with fewer choices.”
Concerns over rental supply
The institute argues that changes to rental regulations have made property investment less attractive, potentially encouraging some landlords to sell, retain properties without renting them or move into short-term accommodation.
For property managers, the concern is that a reduction in the number of homes available for long-term rental could place further pressure on an already competitive market.
However, while the decline in investor lending has been highlighted by the Reserve Bank, REINSW’s argument that NSW Government reforms are responsible for investors leaving the market is the institute’s position, rather than a causal finding established by the RBA.
Mr McKibbin said the government had failed to adequately consider how its policies affected the supply of rental properties.
“The NSW Government has demonstrated time and again that it is completely naïve to the operation of the real estate market,” he said.
What happens when an investor sells?
Mr McKibbin also questioned the assumption that properties sold by investors would necessarily become accessible to existing renters.
“In attempting to justify its anti-landlord agenda, one of the most cold-hearted and insulting claims from Government is that every time an investor sells a property, a tenant is able to buy it,” he said.
“How can a typical tenant save enough for a deposit to buy a home when so much of their income is spent on rent, given the chronic shortage of supply?
“Even if a first home buyer purchases a property sold by an investor, what happens to the individual tenant living in that home? Why are these tenants so routinely forgotten?”
The comments raise a broader issue for the residential property industry about how changes in investor participation affect the balance between owner-occupied and rental housing.
While the sale of an investment property does not necessarily reduce the overall number of homes, it can change whether a particular dwelling remains available to tenants.
For agencies managing rental portfolios, the debate highlights the importance of understanding whether investors are selling properties, changing their investment strategies or withdrawing homes from the long-term rental market.
REINSW maintains that government policy needs to give greater consideration to the role private investors play in providing rental accommodation, particularly as higher borrowing costs place additional pressure on investment decisions.