Red tape could lead to mass industry exodus

POTENTIAL adjustments to the capital gains tax concession could see more than half of the country’s registered property investors leave the industry.

The 2025 Property Investment Professionals of Australia (PIPA) Annual Property Investor Sentiment Survey, released this week, reported the potential loss of many of its members.

When asked whether they would continue investing if negative gearing was changed, the Survey noted nearly 53% said they would stop.

Only 22% said they would continue, while 25% remained unsure.

Similarly, if the Capital Gains Tax concession was reduced to 25% after 12 months of
ownership, 35% of investors said they would exit the market.

Another 29% were undecided, with the remainder indicating they would continue investing.

Lachlan Vidler, chair of PIPA, said the findings underscore the fragility of investor confidence in the face of potential federal reforms.

“The mere suggestion of changes to longstanding tax concessions is enough to trigger widespread hesitation – and, in many cases, withdrawal,’’ Vidler said.

“Compounding the issue is a lack of clear communication from state governments about tenancy reforms.

“A staggering 64% of respondents were unaware of Victoria’s new vacant residential land tax. And around 60% of respondents said they had only moderate or limited knowledge of changes to tenancy laws across Australia.

“Alarmingly, 10% reported never having heard from their state or territory government
regarding tenancy law changes.

“This disconnect is not just a failure of policy – it’s a failure of engagement.

“Investors are being asked to navigate increasingly complex regulatory environments with little support or clarity and the consequences are playing out in real time.”

The 2025 PIPA Annual Property Investor Sentiment Survey said 16.7% of respondents reported selling at least one investment property over the year to August – up from 14.1% in 2024 and 12.1% in 2023.

It’s the highest rate of investor exits recorded in the survey’s recent history and marks a continuation of a four-year trend that’s steadily eroding Australia’s rental housing supply.

While 42% of these properties were purchased by other investors (a notable jump from 31% last year and just 24% in 2023), the remainder were absorbed by owner-occupiers (37%) and first-home buyers (25%), effectively removing them from the rental pool.

“The steady offloading of rental dwellings is fundamentally reshaping the market, with fewer homes available for tenants and increased pressure on affordability,’’ Vidler said.

The impact is being felt most acutely in Australia’s largest capital cities.

In Melbourne, 22.1% of respondents sold at least one property – up slightly from 21.7% last year. Brisbane saw a decline, with 19.7% selling compared to 26.1% in 2024, but remains a key market for investor exits.

Perth made a notable debut in the top five, with 11% of investors selling.

Sydney saw a sharp drop in investor sales, falling to just 6.3% from 14.9% last year. This decline may be linked to easing interest rates, which have helped reduce mortgage repayment pressures.

In regional Australia, the story is equally dynamic. Regional Queensland surged to the top of the sales list, with 15.8% of investors selling – more than doubling last year’s figure of 7.4%.

Regional Victoria followed at 7.9%, down slightly from 9.3% last year, while Regional NSW saw a dramatic fall to 5.51%, down from 10.5% in 2024.

At the state and territory level, Queensland led the nation in investor sales, with 35.5% of respondents selling – up from 33.4% last year, though down from 39.7% in 2023.

 Victoria held steady at 30%, while NSW saw a steep decline to 11.8%, down from 25.4% last year.

Looking ahead, Brisbane remains the top location for future sales, with 20% of investors indicating plans to sell there over the next 12 to 24 months.

Melbourne follows on 15.2% and Perth on 11.6%. Among regional areas, Queensland again leads with 14.9%, followed by Regional NSW at 12.3%.

Amid the uncertainty, there are signs of renewed confidence.

“Nearly 60% of investors believe the next 12 months is a good time to invest in residential property – up from 45.7% last year and approaching the 62% recorded in 2021, when interest rates were at historic lows,’’ Vidler said.

Melbourne leads as the preferred investment destination, with 41% of respondents identifying it as the best place to buy (up sharply from 26.3% last year).

Brisbane held steady at 16.5%, while Perth dropped to 9.2% from 25.2% in 2023.

“The 2025 PIPA Annual Property Investor Sentiment Survey paints a vivid picture of a sector in flux,” Vidler added.

“Investors are navigating rising costs, policy uncertainty, and shifting market dynamics with resilience – but also with caution.

“As governments consider reforms and the market continues to evolve, the voice of the investor has never been more critical.”