Cash flow crunch fuels investor retreat as sentiment collapses

That was up from 16.7 per cent in 2025 and 14.1 per cent in 2024, marking a third consecutive annual increase in selling.

More than half of sellers, or 51.6 per cent, said at least one property had been sold to an owner-occupier, up from 37 per cent last year, while 12.4 per cent sold to a first home buyer.

PIPA chair Cate Bakos said the results were the first national indication from the association since changes to negative gearing and capital gains tax (CGT) arrangements became law.

“Last year, investors told us they would walk away if these reforms became law. This year’s survey is the first national read by PIPA since the changes were legislated, and it shows a lot of them are doing exactly that,” Bakos said.

“This is no longer a hypothetical debate about tax policy. Rental homes are leaving the market now, and our members are seeing it play out in real time.”

Costs squeeze investor capacity

The survey also pointed to the holding-cost equation as a major source of the deteriorating outlook.

Nearly two-thirds of respondents, or 62.3 per cent, said their investment properties were running at negative cash flow, up from 56 per cent a year earlier and more than double the 30 per cent low recorded in 2022.

Within that group, 8.8 per cent said they were drawing on savings to meet the shortfall, while another 41.5 per cent described their cash flow as tight.

Cost escalation was widespread, with some 41.7 per cent of investors reporting that expenses including land tax, compliance and minimum-standard costs, insurance, and property management had risen by 11–20 per cent over the past year, up from 39 per cent in 2025.

More than 15 per cent reported increases of between 21 per cent and 40 per cent.

“Investors are not selling because they think it is a smart time to sell. Many are selling because the numbers no longer work for them,” Bakos said.

“Increased holding costs, including higher interest rates, land tax and compliance costs are stretching investor capacity to financial discomfort.”

Only 7.6 per cent of respondents believed it was a good time to sell, down markedly from 36 per cent last year.

Buying intent falls

Sentiment towards further residential investment has also weakened.

Just 44.1 per cent of respondents said the next 12 months represented a good time to invest in residential property, compared with almost 60 per cent last year.

Only 27.8 per cent said they intended to purchase another investment property in the future, down from 41 per cent in 2025.

Among those with no plans to buy again, 63 per cent said the negative-gearing and CGT changes had influenced the decision.

Just 14.7 per cent said their intention to acquire additional property was unaffected by the tax changes, while 21.5 per cent said they would be unlikely to buy again unless the reforms were repealed.

While the policy package was designed to spur investors to pursue new housing projects, the survey indicated that this has not produced a shift towards construction.

Only 4.8 per cent said they were more willing to buy new builds, while 50.7 per cent still preferred established dwellings.

Rental supply concerns deepen

Almost one in 10 respondents, or 9.7 per cent, said they had already withdrawn one or more properties from the long-term rental market.

A further 82 per cent expect the reforms to reduce rental supply in their local area.

The survey also found 27.8 per cent of investors were more likely to redirect their capital towards shares, managed funds, or superannuation, rather than residential property.

Yet not all investors reported changing their position, with some 46 per cent noting that the policy changes had not influenced whether they held, sold, or delayed selling existing properties.

Confidence in the durability of property tax settings was particularly weak: 87.2 per cent were not confident future governments would maintain stable and predictable settings for property investors, including 50.4 per cent who were not confident at all.

“Once trust in the stability of the tax system is gone, it is extraordinarily hard for the government in power to win that trust back,” Bakos said.

[Related: Budget and SMSF changes forecast to substantially reduce supply]