12 October 2026 · 4 MIN READ
Australian investors are selling mainly because of four Reserve Bank rate rises and tax changes announced in the May federal budget, according to realestate.com.au. Marathon 360, a London company that supplies pre-warmed, qualified investor leads to real estate agents, has read the latest reports. They show investors adapting rather than leaving.
The tax changes and rate rises behind the pullback
The realestate.com.au Terri Scheer Investor Report found that investor loans fell 9 per cent in the June quarter, following a strong 2024 and 2025. Two things drove the decline.
First, the May federal budget announced changes to the capital gains tax discount and to negative gearing for established rental properties. realestate.com.au reports that negative gearing will no longer be available for existing residential properties bought from now on. It also reports that the capital gains tax change affects what investors pay when they sell from July 2027.
Second, the Reserve Bank has raised rates four times. Economist Luc Redman said the pullback has been seen in New South Wales, Queensland, Western Australia and Victoria. He said it was what you would expect given the cost of borrowing and the new tax settings.
Melbourne is where the exit is most visible
According to the PropTrack Terri Sheer Investor Report, reported by realestate.com.au, ex-rentals made up more than 40 per cent of newly listed homes for sale in Melbourne after the budget changes. That was the biggest share of residential sales among Melbourne, Sydney and the smaller capital cities.
Victoria stands out. Investor activity there has stayed well below average. The report points to the state government raising land tax and compliance costs, which added to the number of owners leaving.
Tenants are feeling it. Melbourne's median rent rose 5.3 per cent over the past year to a record 600 dollars a week, according to the same report.
Most investors are selling at a profit
This is not a story of distressed selling by most owners. Realestate.com.au reports that around 93 per cent of investment property resales so far this year sold for more than they were bought for. In Melbourne, about 85 per cent of recent investor sales were profitable. The median profit was 270,000 dollars on an average 10-year hold, the lowest profit among the capital cities.
Mr Redman described that as relatively strong confidence that a 10-year holder will probably still come out on top.
Investors are adapting, not leaving
Terri Scheer executive manager Carolyn Parrella said investors are not necessarily leaving the market. She said they are adapting to it.
The data supports that view:
- Investor loans for buying or building new homes rose 24 per cent nationally in the June quarter.
- Mr Redman noted that negative gearing benefits still apply to new builds.
- Inquiry has shifted towards higher-yielding properties, as investors focus on cash flow.
- In metro areas, investors lean towards units, apartments and semi-detached homes. In regional areas, they still look at houses.
- FoundIt purchasing agent John O'Brien said investors getting into the market want at least a 4 per cent yield.
Realestate.com.au's Angus Moore said low-yielding and loss-making rentals are likely to become less attractive. He also said tight rental conditions and softer home prices should support investor activity over the next year. Mr Redman expects yields to rebalance over the next six to 12 months, with investors then re-entering the market at a new equilibrium.
Property Update, citing Cotality data reported by the Australian Financial Review, adds that vendors are moving away from auctions. The share of new capital-city listings going to auction fell from 40.4 per cent at the March peak to around 25 per cent.
What this means for agents
The market is splitting into sellers who are exiting and investors who are redirecting their capital. Both groups need an agent.
- Speak to the sellers early. With most resales profitable, owners may be open to a conversation about timing, especially ahead of the July 2027 capital gains tax change.
- Lead with yield. Investors are asking about rental yield and cash flow. Have local yield figures ready for each listing.
- Know your new-build stock. Demand for new homes is rising, and negative gearing still applies to them. Make sure you can explain the difference between new and established stock.
- Match stock to the investor. Units and semi-detached homes suit city investors. Houses suit regional ones.
- Price realistically. Property Update notes that private sales are replacing auctions in softer conditions. Accurate pricing matters more than ever.
- Keep your pipeline of qualified demand full. Investors who are re-entering the market want specific answers. Our lead generation for agents work is built around that. You can see where we operate on our Australia market page.
Frequently asked questions
Why are Australian property investors selling up in 2026?
Four Reserve Bank rate rises and the May federal budget changes to negative gearing and the capital gains tax discount have reduced the appeal of some rentals. Victoria's higher land tax and compliance costs have added to the exits.
Are investors selling at a loss?
Mostly not. Realestate.com.au reports that around 93 per cent of investment property resales this year sold for more than they were bought for. In Melbourne, about 85 per cent of recent investor sales were profitable.
Are investors leaving the Australian property market altogether?
Not according to the report. Investor loans fell 9 per cent in the June quarter, but loans for buying or building new homes rose 24 per cent. Terri Scheer's Carolyn Parrella said investors are adapting to the market rather than leaving it.